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4. TRM Consulting Services currently has the following capital structure: Source Book Value Quantity 1250,000 100,000 8,600 8,600,000 New debt would mature on June 30,
4. TRM Consulting Services currently has the following capital structure: Source Book Value Quantity 1250,000 100,000 8,600 8,600,000 New debt would mature on June 30, 2047, have a coupon rate of 6.5%, and would be sold for their par value of $1,000. The bonds pay interest semiannually, and flotation costs would be 2% of the selling price. The bonds would be issued on June 30, 2017. The preferred stock pays a $3 dividend annually and is currently valued at $64 30 per share. Flotation costs on preferred would be 4% of the price The common stock, which can be bought for $32.00, has experienced a 6% annual growth rate in dividends and is expected to pay a S1.45 dividend next year. Flotation costs on new common equity would be 8%. Assume that TRM's marginal tax rate is 35%. Calculate the following: A. After-tax cost of debt B. Cost of preferred equity C. Cost of common equity D. Book-value weights for each source of capital. E. Market-value weights for each source of capital F. Weighted average costs of capital using both the market-value and book-value weights
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