Author Question: Peter's Audio Shop has a cost of debt of 7 percent, a cost of equity of 11 percent, and a cost of ... (Read 102 times)

Garrulous · **on:** Apr 25, 2021

Peter's Audio Shop has a cost of debt of 7 percent, a cost of equity of 11 percent, and a cost of preferred stock of 8 percent. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $500,000 and sells at 102 percent of face value. The company's tax rate is 34 percent. What is the weighted average cost of capital for Peter's Audio Shop?
◦ 6.14 percent
◦ 6.54 percent
◦ 8.60 percent
◦ 9.14 percent
◦ 9.45 percent

briezy · **Reply #1 on:** Apr 25, 2021

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