You are trying to estimate out how much it costs Aptiv (APTV) to raise capital

Finance Dec 10, 2020

You are trying to estimate out how much it costs Aptiv (APTV) to raise capital. They figure they can borrow money at a rate of 3.4%. The appropriate tax rate is 12%. The preferred stock carries a $5.50 dividend and is priced at $141.60 per share. The common stock has a beta of 2.25. Assume a 1% risk free rate and an 7% market risk premium. If they use 11% debt financing, 1% preferred financing and 88% common stock financing, what is the weighted average cost of capital?

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