The Wendell Co. uses 40 percent common stock, 30 percent preferred stock, and 30 percent debt as their capital structure. The ﬂotation costs are 5 percent for debt, 9 percent for preferred stock,
And 8 percent for common stock. The corporate tax rate is 35 percent. What is the weighted
Average ﬂotation cost?

Question

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The Answer of The Wendell Co. uses 40 percent common stock, 30 percent preferred stock, and 30 percent debt as their capital structure. The ﬂotation costs are 5 percent for debt, 9 percent for preferred stock,
And 8 percent for common stock. The corporate tax rate is 35 percent. What is the weighted
Average ﬂotation cost?