EXERCISE 1: COST OF CAPITAL A company wants to raise $50 million to finance the following capital expenditure projects, with their respective rates of return. Project A Project B Project C Project D Project E Project F 414 The various sources and cost of funds are as follows: In millions of $ 8% 9% 10% 11% 12% 13% Amounts Cost (after tax) Common shares $20 14% 10 10% Retained eaming 10 6% Mortgage 10 7% Bonds Questions 1. What is the company's cost of capital?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter16: Financial Planning And Forecasting
Section: Chapter Questions
Problem 2P: AFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end...
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EXERCISE 1: COST OF CAPITAL
A company wants to raise $50 million to finance the following capital expenditure projects, with their respective rates of retum.
Project A
Project B
Project C
Project D
Project E
Project F
414
8%
10%
11%
12%
13%
The various sources and cost of funds are as follows:
In millions ofS
Amounts
Cost (after tax)
Common shares
$20
14%
Retained eamings
10
10%
10
6%
Mortgage
Bonds
Questions
1. What is the company's cost of capital?
Transcribed Image Text:EXERCISE 1: COST OF CAPITAL A company wants to raise $50 million to finance the following capital expenditure projects, with their respective rates of retum. Project A Project B Project C Project D Project E Project F 414 8% 10% 11% 12% 13% The various sources and cost of funds are as follows: In millions ofS Amounts Cost (after tax) Common shares $20 14% Retained eamings 10 10% 10 6% Mortgage Bonds Questions 1. What is the company's cost of capital?
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