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

Question

Global Technology's capital structure is as follows Debt Preferred stock Common equity 15% 50 35 The aftertax cost of debt is 7.00 percent; the cost of preferred stock is 11.00 percent; and the cost of common equity (in the form of retained eamings) is 14.00 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 0.001%

Explanation / Answer

Weighted cost Debt(0.15*0.07) 1.05% Preferred stock(0.5*0.11) 5.5% Common equity*(0.35*0.14) 4.9% WACC 11.45%

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