Global Technology\'s capital structure is as follows: Debt Preferred stock Commo

Question

Global Technology's capital structure is as follows: Debt Preferred stock Common equity 35% 15 50 The aftertax cost of debt is 6.00 percent; the cost of preferred stock is 10.00 percent; and the cost of common equity (in the form of retained earnings) is 13.00 percent. Calculate the Global Technology's weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost Debt Preferred stock Common equity Weighted average cost of capital

Explanation / Answer

Calculate weighted average cost of capital :

Weighted cost Debt (6*35%) 2.10 Preferred stock (10*15%) 1.50 Common equity (13*50%) 6.50 Weighted average cost of capital 10.10%

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