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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
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 10.4%. The bonds have a current market value of $1,123 and will mature in 10 years. The firms' marginal tax rate is 34%. The cost of capital from this bond debt is? 5.63% b. A new common stock issue that paid a $1.76 dividend last year. The firm's dividends are expected to continue to grow at 6.5% per year forever. The price of the firm's common stock is now $27.86. The cost of capital from the common equity is 13.23% c. A preferred stock paying a 8.4% dividend on a $127 par value. The cost of the preferred stock is? % Round to two decimal places. d. A bond selling to yield 11.6% where the firm's tax rate is 34%
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