A firm has the following target capital structure with $17,496 of debt, $4,632 of preferred stock and $12,413 of equity. The after-tax cost of debt is 6.14%, the cost of preferred stock is 10.92% and the cost of common equity is 16.87%. The firm faces a tax rate of 40%. What will be the firms weight on equity capital?

(your answer should be in percentages so 10% would be entered as 10 or 10%)

hint: you need to first find the total amound of invested capital

Please help with these. I look forward to giving a positive review for completion.

A firm is raising capital for a new project. Their oustanding bonds pay 14% interest annually. Investors currently pay $1124 for the 10-year bond. This firm plans to issue common stock. The additional risk permium on the firm's stock is 2.3%. Estimate the cost of equity capital?

• Take a minute and rewrite this information in your own words?
• What information is provided and what are you trying to find?
• Which intermediate steps are needed (do you need the yield to maturity on the bonds?)
• Which of the three cost of equity methods should be used based on the information provided

Solve for the cost of equity

		2.69%
		4.99%
		6.51%
		None of the other choices
		4.21%