2B4B AN ACCOUNTANT FOR STABILITY INC. MUST CALCULATE THE WEIGHTED AVE...

129.

CSO: 2B4a

LOS: 2B4b

An accountant for Stability Inc. must calculate the weighted average cost of capital of the

corporation using the following information.

Interest Rate

Accounts payable

$35,000,000

-0-

Long-term debt

10,000,000

8%

Common stock

10,000,000

15%

Retained earnings

5,000,000

18%

What is the weighted average cost of capital of Stability?

a.

6.88%.

b.

8.00%.

c.

10.25%.

d.

12.80%.