Problem 11-26 Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round interm calculations to 2 decimal places. Round the final answers to 2 decimal places.) Percent of capital structure: Debt Preferred stock Common equity Additional information: Bond coupon rate Bond yield Bond flotation cost Dividend, expected common Price, common Dividend, preferred Flotation cost, preferred Flotation cost, common Corporate growth rate Corporate tax rate 50% 20 30 8.5% 9.00% 2% $1.50 $30.00 7% 3% 4.00% 5% 35% a. Calculate the cost of capital assuming use of internally generated funds. Internal capital cost. 1% b. Calculate the cost of capital assuming use of externally generated funds. External capital cost c. This part of the question is not part of your Connect assignment. 4

Problem 11-26 Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round interm calculations to 2 decimal places. Round the final answers to 2 decimal places.) Percent of capital structure: Debt Preferred stock Common equity Additional information: Bond coupon rate Bond yield Bond flotation cost Dividend, expected common Price, common Dividend, preferred Flotation cost, preferred Flotation cost, common Corporate growth rate Corporate tax rate 50% 20 30 8.5% 9.00% 2% $1.50 $30.00 7% 3% 4.00% 5% 35% a. Calculate the cost of capital assuming use of internally generated funds. Internal capital cost. 1% b. Calculate the cost of capital assuming use of externally generated funds. External capital cost c. This part of the question is not part of your Connect assignment. 4

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 1Q: Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt,...

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