The Tyler Oil Company's capital structure is as follows: Debt Preferred stock Common equity 35%...
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The Tyler Oil Company's capital structure is as follows: Debt Preferred stock Common equity 35% 15 50 The aftertax cost of debt is 7 percent; the cost of preferred stock is 10 percent; and the cost of common equity (in the form of retained earnings) is 13 percent. 8-1. Calculate Tyler Oil Company's weighted average cost of capital. (Round the final answers to 2 decimal places.) Weighted Cost Debt (Kd) Preferred stock (Kp) Common equity (Ke) Weighted average cost of capital (ka) As an alternative to the capital structure shown above for Tyler Oil Company, an outside consultant has suggested the Following modifications. 60% Debt Preferred stock Common equity 5 35
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