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Calculate the cost of capital assuming use of externally

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Reference no: EM132474284

Percent of capital structure:     Debt35%                  Preferred stock50         Common equity15

Additional information:           Bond coupon rate8.5%      Bond yield8.00%          Bond flotation

                                               cost2% Dividend,    expectedcommon$1.50 Price, common$30.00 Dividend,

                                            preferred6% Flotation cost, preferred3%    Flotation cost, common4.00%

                                              Corporate growth rate6%         Corporate tax rate35%

Question 1: Calculate the cost of capital assuming use of internally generated funds.

Question 2: Calculate the cost of capital assuming use of externally generated funds.

Reference no: EM132474284

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