Nipigon manufacturing has a cost of debt of 9 %, a cost of equity of 11%, and a cost of preferred stock of 10%. nipigon currently has 120,000 shares of common stock outstanding at a market price of $25 per share. there are 49,000 shares of preferred stock outstanding at a market price of $38 a share. the bond issue has a face value of $950,000 and a market quote of 106. the company’s tax rate is 40%. required: calculate the weighted average cost of capital for nipigon.

Question

04-08-2022
Business

Answered

Westonci.ca makes finding answers easy, with a community of experts ready to provide you with the information you seek. Join our platform to connect with experts ready to provide accurate answers to your questions in various fields. Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields.

Nipigon manufacturing has a cost of debt of 9 %, a cost of equity of 11%, and a cost of preferred stock of 10%. nipigon currently has 120,000 shares of common stock outstanding at a market price of $25 per share. there are 49,000 shares of preferred stock outstanding at a market price of $38 a share. the bond issue has a face value of $950,000 and a market quote of 106. the company’s tax rate is 40%. required: calculate the weighted average cost of capital for nipigon.

Sagot :

We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.

h(x)=3x−3, find h(3)h(3)

What is your favorite colorω

If x = -3, then x 2 - 7x + 10 equals 37 40 22

The “Yazoo Lands” refers to areas on Georgia’s frontier. After the Revolutionary War, these were lands far from Georgia's mostly population, and much of it was

Which of the following is an incorrect statement? The pulley is a special type of wheel and axle. The mechanical advantage of a pulley with three ropes is one.

Your friend simplifies the expression. Is your friend correct? Math equation on a paper. First line. 8 x minus 2 x plus 5 x equals 8 x minus 7 x. Second line. E

If 4 notebooks and 3 packages of pens cost $7.43 and 5 notebooks and 2 packages of pens cost $7.03, what is the price of 1 notebook? A) $0.89 B) $0.79 C) $1.29

A solution that contains 3 grams of solute dissolved in 100 millimeters of solution is: a) 3% m / m b) 3% m / v c) 10% m / v

how did the hundred years war affect medieval Europea. France became more interested in trading overseasb. the longbow and cannon made knights and castles less

Her old eyes warmed at the sudden thought.This suggests that

Tutorconsortium319 Tutorconsortium319 · Answer 1 · 2022-08-11T10:32:13-04:00

the weighted average cost of capital for Nipigon is 0.049716

Calculate the weighted average cost of capital for Nipigon

cost of Equity share= 120,000 x $25= $30,00,000

cost of Preference share= 49,000 x $38= $18,62,000

cost of debt= $9,50,000

Total cost = $30,00,000 + $18,62,000 + $9,50,000

= $58,12,000

Weightage

Equity= $30,00,000/$58,12,000= 0.516

Preference= $18,62,000/$58,12,000= 0.320

Debt= $9,50,000/$58,12,000= 0.164

Rates

Equity = 0.11

Preference= 0.10

Debt= 0.09 (1-0.4)= 0.54

weighted average cost

Equity= 0.516 x 0.11 = 0.05676

preference= 0.320 x 0.10= 0.0320

Debt= 0.164 x 0.54= 0.00886

Total weighted average cost= 0.05676+0.0320+0.00886

=0.049716

What is the weighted average cost method?

A weighted average computation accounts for the varying levels of significance of the numbers in a data collection. A specified weight is multiplied by each value in the data set before the final computation is completed when calculating a weighted average.

Learn more about weighted average cost method: https://brainly.com/question/8543883

#SPJ4

Sagot :

Other Questions