Homework SourseBased on the information provided below compute the Weighted
Based on the information provided below, compute the Weighted Average Cost of Capital.
| Acme International Capital Sources | Required | ||
| Return rates | |||
| Common Stock and Retained Earnings | $ 400,000 | 8% | |
| Preferred Stock | $ 100,000 | 7% | |
| Corporate Bonds | $ 300,000 | 10% | |
| Corporate tax rate | 35% |
Solution
400,000 * 0.08 + 100,000 * 0.07 + 300,000 * 0.10
69000
