HBM, Inc. has the following capital structure: Assets ......$400,000 Debt ....... $140,000 Preferred stock ... 20,000 Common

Question:

HBM, Inc. has the following capital structure:
Assets ......$400,000
Debt ....... $140,000
Preferred stock ... 20,000
.....240,000
The common stock is currently selling for $15 a share, pays a cash of $0.75 per share, and is growing annually at 6 percent. The preferred stock pays a $9 cash and currently sells for $91 a share. The debt pays interest of 8.5 percent annually, and the firm is in the 30 percent marginal tax bracket.
a. What is the after-tax cost of debt?
b. What is the cost of preferred stock?
c. What is the cost of common stock?
d. What is the firm’s weighted-average cost of capital?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...