$3.$

Bonds

A bond has a coupon rate of $6\%$ paid annually, maturity of $15$ years and par value of $$1,000.$ The bonds have a market value of $$300,000.$ The bond is currently sold at $$950.$ Tax rate is $25\%.$

a$.$ What is the bond$$s before tax cost of debt?

b$.$ What is the bond$$s after tax cost of debt?

Preferred Stock

A preferred stock has a $$8$ per share dividend, and share price of $$100,$ with flotation cost of $5\%.$ Determine the cost of preferred stock? The market value for preferred stock is $$200,000.$

Determine the cost of preferred stock

Common Stock

A company just paid dividends of $$2\mathrm{.}75$ per share. The company has a constant growth of $5\mathrm{.}5\%.$ The risk$-$free rate is $2\mathrm{.}25\%,$ beta is $0\mathrm{.}80$ and market return of $8\%.$ Market value of the common stock is $$500,000.$

Determine the weighted average cost of capital for the company.