CAN SOMEONE PLEASE EXPLAIN WHAT IS GOING ON HERE?

3. The following five parts are all based on the status quo of company BW. (1) Company BW has issued 8,000 corporate bonds with a maturity value of $1,000 and a coupon rate of 7%. Coupon payments are made every 6 months and those bonds will mature in a year from today. Current market price of those bonds is $976.86. Marginal corporate income tax rate is 34%, find the annual after-tax cost of debt. [7 points]

(a) Company BW has issued 35,000 preferred stocks. The par value is $100, dividend rate is 7.5%, and dividend is paid quarterly. Market price is $82 a share. Find the annual cost of preferred stock. [5 points]

(b) Company BW has 100,000 shares outstanding and the market price is $25 per share. People believe this company is 1.8 times as risky as the stock market. Current T-bill rate is 2.5% and expected annual market risk premium is 9.1%. What is BWs annual cost of equity? [5 points] 1

(c) Find the overall (annual) cost of capital for BW (WACC), assuming it has financed only through bonds, preferred stocks and common stocks. [10 points]

(d) Company BW has the following two investment opportunities (A and B). Which project is better, according to MIRR? [10 points] Which project is better, according to Discounted Payback period? [10 points]