Answer Happy

Beeling your argum A venture capitalist has decided to establish a new business and raise capital of $200,000 from different sources. The corporate tax bracket for the firm is 40%. What would be the weighted average cost of capital (WACC) for the business if it decides to collect capital from the following sources? Remember, the venture capitalist knows that WACC=W. (1-0),+w,1,+ way. Raising equity capital of $100,000 by issuing common stocks. The required rate of return for common stocks is 10% Raising equity capital of $50,000 ty issuing preferred stocks. The required rate of return for preferred stocks is 6% (m) Taking loan of $25,000 from a private commercial bank at the rate of 10% interest. (iv) Issuing corporate bonds of $25,000 at 10% annual coupon.