Question
Consider the following information for CWB Inc. -Target capital structure: 20% debt; 20% preferred stock; 60% common equity -Its bonds have a 12 percent coupon,
Consider the following information for CWB Inc.
-Target capital structure: 20% debt; 20% preferred stock; 60% common equity
-Its bonds have a 12 percent coupon, paid semi-annually, a current maturity of 20 years, sell for $1,000
-The firm could sell, at par, $100 preferred stock which pays a 12% annual dividend, but floatation costs of 5% would be incurred.
-The firm has beta of 1.2, the risk-free rate is 10%, and the market risk premium is 5%.
-The firm is a constant-growth firm which just paid a dividend of $2.00, sells for $27.00 per share, and has a growth rate of 8% percent. The firms policy is to use a risk premium of 4% points when using bond-yield-plus-risk premium method to find rs. The firms marginal tax rate is 40%
What is CWBs cost of debt?
What is CWBs cost of preferred stock?
What is CWBs cost of common stock (rs) using the CAPM approach?
What is CWBs cost of common stock (rs) using the DCF approach?
What is CWBs cost of common stock (rs) using the bond-yield -plus-risk premium approach?
What is CWB WACC using rs with the CAPM approach?
This is ALL one question, please answer all the questions listed with the problem.
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