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

a.Currently bonds with a similar credit rating and maturity as the firm's outstanding debt are selling to yield

7.32

percent while the borrowing firm's corporate tax rate is

34

percent.b.Common stock for a firm that paid a

$1.02

dividend last year. The dividends are expected to grow at a rate of

4.4

percent per year into the foreseeable future. The price of this stock is now

$24.93.

c.A bond that has a

$1,000

par value and a coupon interest rate of

11.2

percent with interest paid semiannually. A new issue would sell for

$1,152

per bond and mature in

20

years. The firm's tax rate is

34

percent.d.A preferred stock paying a dividend of

6.8

percent on a

$108

par value. If a new issue is offered, the shares would sell for

$83.76

per share.

Question content area bottom

Part 1

a.The after-tax cost of debt debt for the firm is

enter your response here%.

(Round to two decimal places.)