8-37 The Weighted Average Cost of Capital Now we have all the inputs we need to estimate the weighted average cost of capital: k a = 0.4 x 5.47% + 0.1
{"Image DocumentName": "The Weighted Average Cost of Capital", "Image ImageDescription": "Now we have all the inputs we need to estimate the weighted average cost of capital: ka = 0.4 x 5.47% x 10.31% x 13.33% ka = 9.88% Therefore, this firm should use 9.88% as the minimum required rate of return when evaluating investments. An average return of 9.88% is required to pay off the firm\u2019s contractual obligations on bonds and preferred stock and still have enough left over to satisfy common shareholders with a sufficient return!", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}