FIN3310 Section009 (CRN16376) Question 3, P14-6 (simil... Part 1 of 4 HW Score: 0%, 0 of 70 points O Points: 0 of 10 (Individual or component costs of capital) 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 8.18 percent while the borrowing firm's corporate tax rate is 34 percent. b. Common stock for a firm that paid a $1.08 dividend last year. The dividends are expected to grow at a rate of 5.7 percent per year into the foreseeable future. The price of this stock is now $25.96. c. A bond that has a $1,000 par value and a coupon interest rate of 11.6 percent with interest paid semiannually. A new issue would sell for $1,153 per bond and mature in 20 years. The firm's tax rate is 34 percent. d. A preferred stock paying a dividend of 6.2 percent on a $100 par value. If a new issue is offered, the shares would sell for $86.08 per share. a. The after-tax cost of debt debt for the firm is %. (Round to two decimal places.)