FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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%
Preferred stock 10% 9%
Common stock 25% 15%
Retained earnings 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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