Question
1Given the following data, calculate the cost of the companys preferred stock, common stock, and bonds. Preferred stock: dividend = 1.50, price=10.00 Common stock: dividend=1.00,
1Given the following data, calculate the cost of the companys preferred stock, common stock, and bonds.
Preferred stock: dividend = 1.50, price=10.00
Common stock: dividend=1.00, growth rate=5%, price=25.00
Bonds: coupon rate=6%, maturity=10 years, yield=7%, tax rate=32%
2Given the costs youve calculated for the companys sources of financing, now calculate the companys weighted average cost of capital (WACC), assuming the following capital structure: The company raised $500 million of its money from bonds and $25 million each from common stock and preferred stock:
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