the weighted average cost of capital for Nipigon is 0.049716
Calculate the weighted average cost of capital for Nipigon
cost of Equity share= 120,000 x $25= $30,00,000
cost of Preference share= 49,000 x $38= $18,62,000
cost of debt= $9,50,000
Total cost = $30,00,000 + $18,62,000 + $9,50,000
= $58,12,000
Weightage
Equity= $30,00,000/$58,12,000= 0.516
Preference= $18,62,000/$58,12,000= 0.320
Debt= $9,50,000/$58,12,000= 0.164
Rates
Equity = 0.11
Preference= 0.10
Debt= 0.09 (1-0.4)= 0.54
weighted average cost
Equity= 0.516 x 0.11 = 0.05676
preference= 0.320 x 0.10= 0.0320
Debt= 0.164 x 0.54= 0.00886
Total weighted average cost= 0.05676+0.0320+0.00886
=0.049716
What is the weighted average cost method?
A weighted average computation accounts for the varying levels of significance of the numbers in a data collection. A specified weight is multiplied by each value in the data set before the final computation is completed when calculating a weighted average.
Learn more about weighted average cost method: brainly.com/question/8543883
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