Answered step by step
Verified Expert Solution
Question
1 Approved Answer
8 please show work thank you. Burite has come up with the following capital structure which management believes optimal Debt AON Preferred stock 10% Common
8 please show work thank you. Burite has come up with the following capital structure which management believes optimal Debt AON Preferred stock 10% Common stock 50% Bonds: Bultrite is planning on offering a $1000 par value, 20-year, 8% coupon bond with an expected selling price of $1025 Flotation costs would be $55 per bond, Preferred Stock Builtrite could sell a $46 par value preferred with an 8x coupon for $38 a share. Flotation costs would be 82 share. Common stock: Currently, the stock is selling for $65 a share and has paid a $2.82 dividend. Dividends are expected to continue growing at 10%. Flotation costs would be $3.75 a share and Builtrite has $350,000 in available retained eaming Assume a 40% tax bracket What is the after-tax cost of internal common (or retained earnings)? 752 15.0% 14.8% 14.3%
8 please show work thank you.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started