1) HBM, Inc has the following capital structure:

Assets	$	400,000		Debt	$	180,000
				Preferred stock		60,000
				Common stock		160,000

The common stock is currently selling for $14 a share, pays a cash dividend of $0.65 per share, and is growing annually at 7 percent. The preferred stock pays a $6 cash dividend and currently sells for $86 a share. The debt pays interest of 6.5 percent annually, and the firm is in the 30 percent marginal tax bracket.

a. What is the after-tax cost of debt? Round your answer to two decimal places.

_____%

b. What is the cost of preferred stock? Round your answer to two decimal places.

____ %

c. What is the cost of common stock? Assume that the current $0.65 dividend grows by 7 percent during the year. Round your answer to two decimal places.

____ %

d. What is the firms weighted-average cost of capital? Round your answer to two decimal places.

_____ %