Question
Consider the following data to solve the problems Sources of capital capital Debt (corporate bonds $ 4,100,000 Preferred shares $ 2,200,000 Common shares $ 2,800,000
Consider the following data to solve the problems
Sources of capital | capital |
Debt (corporate bonds | $ 4,100,000 |
Preferred shares | $ 2,200,000 |
Common shares | $ 2,800,000 |
B. To generate the $ 4.1 million of corporate bond capital, they issued bonds at $ 965 par value, with an annual coupon of $ 100 for the next 10 years, with a flotation cost of $ 10 per bond. C. The issue of preferred shares has a cost of $ 5 per share and will pay a dividend of 10% of its par value of $ 110 per preferred share. D. The risk-free rate is 3.45% and the market return is 11.25%. The company's beta coefficient is 1.23. E. Executive Consultants, Inc. has a tax liability of 35%. 1. Determine the capital structure - 2- Calculate the cost of debt 3. Calculate the cost of preferred equity 4. Calculate the cost of equity capital (common shares) 5. Determine the weighted average cost of capital (WACC) for the firm. Remember to show the counts
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