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( Calculating the weighted average cost of capital ) You are working as a consultant to the Lulu Athletic Clothing Company, and you have been
Calculating the weighted average cost of capital You are working as a consultant to the Lulu Athletic Clothing Company, and you have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. You have determined the market value of the firm's current capital structure which the firm considers to be its target mix of financing sources as follows: LOADING....
To finance the purchase, Lulu will sell year bonds with a $ par value paying percent per year with interest paid semiannually at the market price of $ Preferred stock paying a $ dividend can be sold for $ Common stock for Lulu is currently selling for $ per share. The firm paid a $ dividend last year and expects dividends to continue growing at a rate of percent per year for the indefinite future. The firm's maginal tax rate is percent. What discount rate should you use to evaluate the warehouse project?
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Part
a Calculate component weights of capital.
The weight of debt in the firm's capital structure is
Round to two decimal places.
Part
The weight of preferred stock in the firm's capital structure is
Round to two decimal places.
Part
The weight of common stock in the firm's capital structure is
Round to two decimal places.
Part
b Calculate component costs of capital.
The aftertax cost of debt for the firm is Round to two decimal places.
I figured out all the calculations for part A Please help me with part B and part C
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