Firm capital structure and estimated capital costs

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Reference no: EM131351666

The table below shows a firm's capital structure and estimated capital costs. Calculate this firm's weighted average cost of capital.

Source of capital Amount After Tax Cost of Capital

Bonds $1,250,000 5.25%

Preferred Stock 500,000 12.80%

Retained Earnings 3,800,000 15.35%

A. 9.00%

B. 10.51%

C. 12.85%

D. 15.35%

Reference no: EM131351666

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