Weighted Average Cost of Capital Gardner, Inc., plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates: Capital Cost Source Proportion Rate Bonds 40% 12% Preferred stock 20% 8% Common stock 30% 11% Retained earnings 10% 8% 100% Calculate the weighted average cost of capital. Round answers to one decimal place. For example, 0.457 = 45.7%. Weighted Average Cost of Capital Bonds Answer Preferred stock Answer Common stock Answer Retained earnings Answer Answer
Weighted Average Cost of Capital Gardner, Inc., plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates: Capital Cost Source Proportion Rate Bonds 40% 12% Preferred stock 20% 8% Common stock 30% 11% Retained earnings 10% 8% 100% Calculate the weighted average cost of capital. Round answers to one decimal place. For example, 0.457 = 45.7%. Weighted Average Cost of Capital Bonds Answer Preferred stock Answer Common stock Answer Retained earnings Answer Answer
Chapter7: Types And Costs Of Financial Capital
Section: Chapter Questions
Problem 11EP
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Weighted Average Cost of Capital
Gardner, Inc., plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates:
| Capital Cost | ||
|---|---|---|
| Source | Proportion | Rate |
| Bonds | 40% | 12% |
| 20% | 8% | |
| Common stock | 30% | 11% |
| 10% | 8% | |
| 100% |
Calculate the weighted average cost of capital.
Round answers to one decimal place. For example, 0.457 = 45.7%.
| Weighted Average | |
|---|---|
| Cost of Capital | |
| Bonds | Answer
|
| Preferred stock | Answer
|
| Common stock | Answer
|
| Retained earnings | Answer
|
| Answer
|
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