Below is the long term and capital section of the balance sheet for the Seattle Distributing Co.
Category
Value
Notes Payable
$300,000
Bonds Payable
500,000
Preferred Stock
100,000
Common Stock
500,000
Retained Earnings
400,000
Interest of notes is 6%, bonds payable 4%, preferred stock dividends are 5% and the common shareholders opportunity cost is 10%. The tax rate is 25%.
Compute the average weighted cost of capital. You may want to calculate your answer using Excel, and paste the solution into the solution window.