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Peter's Audio Shop Has a Cost of Debt of 7%,a

question 46

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Peter's Audio Shop has a cost of debt of 7%,a cost of equity of 11%,and a cost of preference shares of 8%.The firm has 104,000 shares of ordinary equity outstanding at a market price of £20 a share.There are 40,000 preference shares outstanding at a market price of £34 a share.The bond issue has a total face value of £500,000 and sells at 102% of face value.The tax rate is 34%.What is the weighted average cost of capital for Peter's Audio Shop?


Definitions:

Statement of Changes

Short for the Statement of Changes in Equity; it details the movements in owners' equity over a specific period.

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