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?

Question

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The Answer of 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?

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