capital, to use in evaluating a new company investment. The firm is considering a new investment in a warehousing facility, which it believes will generate an internal rate of return of 11.5 %. The market value of Vestor ' s capital structure is as follows:
Source of Capital
Market Value
Bonds
$ 10,000,000
Preferred Stock
$ 2,000,000
Common Stock
$ 8,000,000