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Weighted Average Costof Capital An Analysis Of Coogly Inc.

This Class Presentation provides an in-depth analysis of the Weighted Average Cost of Capital (WACC) for Coogly Inc.

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  1. Page 1

    Weighted Average Costof Capital An Analysis Of Coogly Inc., page 1WEIGHTED AVERAGE COSTOF CAPITALAn Analysis of Coogly Inc.Name

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    Weighted Average Costof Capital An Analysis Of Coogly Inc., page 2

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    Weighted Average Costof Capital An Analysis Of Coogly Inc., page 3COOGLY–COST OF PREFERRED STOCK➢The Cost of Preferred Stock is calculated by-:Rp= Dp/(Mp-Fp)Here,Rp = Cost of Preferred StockDp = Dividend per Preferred StockMp = Market Price per Preferred StockFp = Floatation Costs per share➢For Coogly the following data is given-:Dp = $4Mp = $82Fp = $6➢So the Cost of Preferred Stock (Rp) =4/(82-6)= 5.26%

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    Weighted Average Costof Capital An Analysis Of Coogly Inc., page 4The Advantages And Disadvantages OfCost Of Preferred Stock-:❖Advantages❑It experiences less risk than Debt-Financing❑It increases flexibility in Capital Structure and dividendPayment❑It has no dilution of control of the firm❖Disadvantages❑It is expensive as compared to debt❑It has dividend obligation

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