Finance

Suppose Mullens Corporation is considering three average-risk projects with the following costs and rates of return: Project 1 2 3 Cost $2,500 $3,000 $2,750 Expected Rate of Return 21.00% 28.00% 29.00% = 15.00% and a tax rate of T = 10.00%. It can issue preferred stock that pays a constant Mullens estimates that it can issue debt at a rate of rd dividend of Dp = $20.00 per year and at Pp = $200.00 per share. Also, its common stock currently sells for Po = $20.00 per share. The expected dividend payment of the common stock is Dl = $5.00 and the dividend is expected to grow at a constant annual rate of g = 5.00% per year. Mullens' target capital structure consists of Ws = 75.00% common stock, Wd = 15.00% debt, and wp = 10.00% preferred stock. According to the video, the after-tax cost of debt can be stated as approximately According to the video, the cost of preferred stock can be stated as of approximately Plugging in the values for rd and (T) yields an after-tax cost of debt of Plugging in the values for Dp and Pp yields a cost of preferred stock of