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Acme Services' CFO is considering whether to take on a new project that has average risk.She has collected the following information: The company has outstanding
Acme Services' CFO is considering whether to take on a new project that has average risk.She has collected the following information:
- The company has outstanding bonds that mature in 26 years. The bonds have a face value of $1,000, an annual coupon of 7.5%, and sell in the market today for $920.There are 10,000 bonds outstanding.
- The risk-free rate is 6%.
- The market risk premium is 5%.
- The stock's beta is 1.2.
- The company's tax rate is 40%.
- The company has 50,000 shares of preferred stock with a par value of $100. These shares are currently trading at $105, and pay an annual dividend of $5.40.
- The company also has 1,850,000 common shares trading at $25. These shares last paid an annual dividend of $0.93.
What is Acme's after-tax cost of debt?
What is Acme's cost of preferred equity?
What is Acme's wd?
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