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  3. 3. the capital structure for nelly company is prov

3. The capital structure for Nelly Company is provided below. Types of financing Percentage of...

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3. The capital structure for Nelly Company is provided below. Types of financing Percentage of future Bonds (8%, RM 1,000 par, 16 year maturity) 38% Preferred stock (5000 shares outstanding, RM50 15% par, RM1.50 dividend) Common equity 47% Total 100% The flotation cost and the market prices of each type of financing is as follows: Flotation Costs Market prices Bond 15% of market value of a new bond RM 1,035 Preferred stock RM2.00 per share RM19 Common equity RM1.20 per share RM35 The dividends for common stock were RM2.50 last year and are projected to have an annual growth rate of 6%. There will be RM500,000 of internal fund available. The tax rate is 24%. the cost of debt financing after tax is 7.21% the cost of debt financing before tax is 9.490% the cost of preferred stock financing is 8.82% the cost of internal common equity financing is 13.57% the cost of external common equity financing is 13.84% v) What is the weighted average cost of capital using the internal common equity financing? vi) What is the weighted average cost of capital using the external common equity financing

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