Source Proportion Rate Bonds 45% 11% Preferred stock 10% 9% Common stock 25% 15% Retained earnings 20% 13% 100%
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Weighted Average Cost of Capital
Austin, 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 | 45% | 11% |
| 10% | 9% | |
| Common stock | 25% | 15% |
| 20% | 13% | |
| 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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