Compute the cost of capital for the firm for the following:

a.A bond that has a

$1,000

par value (face value) and a contract or coupon interest rate of

11.5

percent. Interest payments are

$57.50

and are paid semiannually. The bonds have a current market value of

$1,129

and will mature in

10

years. The firm's marginal tax rate is

34

percet.

b.A new common stock issue that paid a

$1.84

dividend last year. The firm's dividends are expected to continue to grow at

7.1

percent per year, forever. The price of the firm's common stock is now

$27.33.

c.A preferred stock that sells for

$151,

pays a dividend of

8.9

percent, and has a $100 par value.

d.A bond selling to yield

11.2

percent where the firm's tax rate is

34

percent.