Question
1.) Use the information in the table below to answer the questions a- e. Debt Common Stock Preferred Stock Market Tax Rate 50,000 bonds
1.) Use the information in the table below to answer the questions a- e. Debt Common Stock Preferred Stock Market Tax Rate 50,000 bonds with 7.0 % coupon rate, payable annually, $1,000 par value, 12 years to maturity, selling at $1,020 per bond. 1,000,000 shares of common stock outstanding. The stock sells for a price of $30 per share and has a beta of 1.3 100,000 preferred shares outstanding, currently trading at $120 per share; with an annual dividend payment of $9.00 The market risk premium is 8.5% and the risk free rate is 2.5% 30% a. What is the before-tax cost of debt? (2 points) b. What is the after-tax cost of debt? (2 points) c. What is the company's cost of preferred stock? (2 points) d. What is the company's cost of common stock? (2 points) e. Determine the company's weighted average cost of capital (WACC). (2 points)
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
10th Canadian Edition Volume 2
1118300858, 978-1118300855
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