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answer a,b,c,d if possible Preferred stock The firm can sell 8% preferred stock at its $95-per share par valuo. The cost of issuing and selling
answer a,b,c,d if possible
Preferred stock The firm can sell 8% preferred stock at its $95-per share par valuo. The cost of issuing and selling the preferred stock is expected to be $5 per share. Preferred stock can be sold under these terms. Common stock. The firm's common stock is currently selling for 590 per share. The firm expects to pay carsh dividends of $7 per share next year The firm's dividends have been growing at an annual rate of 6%, and this growth is expected to continue into the future. The stock must be underpriced by $7 por share, and flotation costs are expected to amount to $5 per share. The firm can sell new common stock under these terms Retained earnings When measuring this cost the firm does not concern itself with the tax bracket or brokerage fees of owners. It expects to have avallable 5100,000 of retained earmings in the coming year, once these retained eamings are exhausted, the firm wal use new cormmon stock as the form of common stock equity financing a. Calculate the after-tax cost of debt b. Calculate the cost of preferred stock c. Calculate the cost of common stock d. Calculate the firm's weighted average cost of capilal using the capital struchure weights shown in the following table. (Round answer to the nearas 0.01% ) \begin{tabular}{lc} \hline Source of capital & Weight \\ \hline Long-term debt & 30% \\ Preferred stock & 20 \\ Common stock equity & 10050% \\ \hline \end{tabular} Step by Step Solution
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