Calculation of weighted average cost of capital


A firm plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt 10%, preferred stock 11%, and common stock 18%. Assuming a 40% marginal tax rate, what is the firm's weighted average cost of capital?

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Calculation of weighted average cost of capital
Reference No:- TGS056564

Expected delivery within 24 Hours