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answer number 5 please. please show work neatly. preferably not on excel 4. The following six parts are ALL based on the status quo of
answer number 5 please. please show work neatly. preferably not on excel
4. The following six parts are ALL based on the status quo of company BW. (1) Company BW has issued 25,000 zero-coupon bonds with a face value of $1,000. Those bonds will mature in 8 years and the current market price is $576.18 per bond. Investors use semi-annual compounding for bonds. Marginal corporate income tax rate is 20%, find the annual after-tax effective cost of debt. [4 points] (2) Company BW has borrowed $3,200,000 from a bank. The nominal interest rate is 6.6% and BW is making monthly payment. Find the annual after-tax effective cost of bank loan. [4 points] (3) Company BW has 600,000 shares of preferred stock outstanding. The par value is $10 and dividend rate is 12% per year. Dividends are paid every quarter and the current market price of I 1 the preferred is $8.76 per share. Find the annual effective cost of preferred stocks, [4 points] (4) Company BW has 10,000,000 shares outstanding and the market price is $12.27 per share. Annual dividend just paid was $0.75 per share and investors believe future dividends will be increasing by 7% annually. What is the cost of common stocks? [ 4 points] (5) Find the overall (annual) cost of capital for BW (WACC), based on questions 4.1-4.4. [5 points]Step by Step Solution
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