Calculation of individual costs and WACC Lang Enterprises is interested in measuring its overall cost of capital. Current investigation has gathered the follow Debt The firm can raise debt by selling $1,000-par-value, 7% coupon interest rate, 17.your bonds on which annual interest payments will be made. To sell the is flotation costs of $35 per bond Preferred stock The firm can sell 7% preferred stock at its $105 por share par value. The cost of issuing and selling the proferred stock is expected to be $A por Common stock The firm's common stock is currently selling for $65 per share. The firm expects to pay cash dividends of $75 per hare next year. The him's d into the future. The stock must be underpriced by $8 per share, and flotation costs are expected to amount to $3 per share. The firm can sell new common stock Retained earnings When measuring this cost, the tiom does not concern itself with the tax bracket or brokerage foes of owners. It expects to have antable 511 the firm will use new common 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 a. The after-tax cost of debt using the approximation formula is 587% (Round to two decimal places) The after-tax cost of debt using the bond's yield to maturity (YTM) 592 % (Round to two decimal places.) b. The cost of preferred stock is 7 49% (Round to two decimal places) suring its overall cost of capital. Current investigation has gitnored the following data. The firm is in the 225 tax bracket 17 your bonds on which annual interest payments will be made. To sell the issue, an average discount of 20 per bond would have to be given the femalso must pay nue. The cost of issuing and selling the preferred stock is expected to be 54 por share. Preferred stock can be sold under these terms ho tiem expects to pay cash dividends of ST 5 per shure next year. The tim's dividends have been growing at an annual rate of 6% and thus growth is expected to continuo s are expected to amount to $3 por share. The firm can sell now common stock under these terms the tax bracket or brokerage fees of owners I expects to have available $110,000 of retained earnings in the coming year, once these retained earnings are exhausted, to two decimal places) Cound to two decimal places Calculation of individual costs and WACC Lang Enterprises is interested in measuring its overall cost of capital. Current investigation has gathered the follow Debt The firm can raise debt by selling $1,000-par-value, 7% coupon interest rate, 17.your bonds on which annual interest payments will be made. To sell the is flotation costs of $35 per bond Preferred stock The firm can sell 7% preferred stock at its $105 por share par value. The cost of issuing and selling the proferred stock is expected to be $A por Common stock The firm's common stock is currently selling for $65 per share. The firm expects to pay cash dividends of $75 per hare next year. The him's d into the future. The stock must be underpriced by $8 per share, and flotation costs are expected to amount to $3 per share. The firm can sell new common stock Retained earnings When measuring this cost, the tiom does not concern itself with the tax bracket or brokerage foes of owners. It expects to have antable 511 the firm will use new common 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 a. The after-tax cost of debt using the approximation formula is 587% (Round to two decimal places) The after-tax cost of debt using the bond's yield to maturity (YTM) 592 % (Round to two decimal places.) b. The cost of preferred stock is 7 49% (Round to two decimal places) suring its overall cost of capital. Current investigation has gitnored the following data. The firm is in the 225 tax bracket 17 your bonds on which annual interest payments will be made. To sell the issue, an average discount of 20 per bond would have to be given the femalso must pay nue. The cost of issuing and selling the preferred stock is expected to be 54 por share. Preferred stock can be sold under these terms ho tiem expects to pay cash dividends of ST 5 per shure next year. The tim's dividends have been growing at an annual rate of 6% and thus growth is expected to continuo s are expected to amount to $3 por share. The firm can sell now common stock under these terms the tax bracket or brokerage fees of owners I expects to have available $110,000 of retained earnings in the coming year, once these retained earnings are exhausted, to two decimal places) Cound to two decimal places
