Given the following information, calculate the
weighted average cost for the Han Corp.
Common equity 60%
Debt 30%
Additional information:
Corporate tax rate 34%
Dividend, preferred $9.00
Dividend, expected common $3.50
Price, preferred $102.00
Growth rate 6%
Bond yield 10%
Flotation cost, preferred $3.20
Price, common $70.00
TUTORIAL PREVIEW
Calculation of cost of capital:
Cost of preferred stock = Preferred dividend/ (current preferred stock price - flotation cost)
= 9 / (102 -3.2)
9.11%
File name: Han corp.xls File type: xls PRICE: $6
Percent of capital structure:
Preferred stock 10%Common equity 60%
Debt 30%
Additional information:
Corporate tax rate 34%
Dividend, preferred $9.00
Dividend, expected common $3.50
Price, preferred $102.00
Growth rate 6%
Bond yield 10%
Flotation cost, preferred $3.20
Price, common $70.00
TUTORIAL PREVIEW
Calculation of cost of capital:
Cost of preferred stock = Preferred dividend/ (current preferred stock price - flotation cost)
= 9 / (102 -3.2)
9.11%
File name: Han corp.xls File type: xls PRICE: $6
