Foe Corporation’s has the capital structure given below: Debt (at market value) $2,000,000 Preferred stock (at market value) $600,000 Common stock (at market value) $ 3,000,000 Assuming the market weight are also the target weights for Foe Corp. please calculate the weights that should be used to find the weighted average cost of capital for Foe Corp.
If the after tax cost of debt is 6% the cost of preferred stock is 8% and the cost of common stock is 10%, what is the weighted average cost of capital?