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(Individual or component costs of capital) Compute the cost of capital for the firm for the following: A bond that has a $1.0 (30 par
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: A bond that has a $1.0 (30 par value (face value) and a contract or coupon interest rate of 11 percent. Interest payments are $ 55.00 and are paid semiannually. The bonds have a current market value of $1.125 and will mature in 10 years. The firm's marginal lax rate is 34 percent. A new common stock issue that paid a $1.80 dividend last year. The firm's dividends are expected to continue to grow at 7 percent per year, forever. The price of the firm s common stock is now $ 27.50. A preferred stock that sells for $ 125. pays a 9 percent dividend, and has a $ 100 par value. A bond selling to yield 12 percent where the firm's tax rate is 34 percent
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