A.4 ABC Company has on its books the following amountsand specific costs of each type of capital:Type ofBook ValueMarket Value Specific CostsCapital($)($)DebtPreferenceEquityRetainedEarnings600,0001,000,000800,0002,000,000480,0001,100,000900,0003,000,000(a)Book Value weights, and(b) Market Value weights(%)54,400,0005,480,000Determine the weighted average cost of capital using81513

a. Book weight of debt = $600,000 / $4,400,000 = 0.1364*100 = 13.64% Book weight of preference…

A.4 ABC Company has on its books the following amounts and specific costs of each type of capital: Type of Book Value Market Value Specific Costs Capital ($) ($) 600,000 1,000,000 800,000 2,000,000 Debt Preference Equity Retained Earnings 480,000 1,100,000 900,000 3,000,000 4,400,000 5,480,000 Determine the weighted average cost of capital using (a)Book Value weights, and (b) Market Value weights (%) 5 8 15 13

A.4 ABC Company has on its books the following amounts and specific costs of each type of capital: Type of Book Value Market Value Specific Costs Capital ($) ($) 600,000 1,000,000 800,000 2,000,000 Debt Preference Equity Retained Earnings 480,000 1,100,000 900,000 3,000,000 4,400,000 5,480,000 Determine the weighted average cost of capital using (a)Book Value weights, and (b) Market Value weights (%) 5 8 15 13

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 7EA: Assume Skyler Industries has debt of $4,500,000 with a cost of capital of 7.5% and equity of...

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