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(Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has a $ 1
(Individual or component costs of capital)Compute the cost of capital for the firm for the following: a.A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.0 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 tax rate is 34 percet. b.A new common stock issue that paid a $1.80 dividend last year. The firm's dividends are expected to continue to grow at 7.0 percent per year, forever. The price of the firm's common stock is now $27.50. c.A preferred stock that sells for $125, pays a dividend of 9.0 percent, and has a $100 par value. d.A bond selling to yield 12.0 percent where the firm's tax rate is 34 percent. a.The after-tax cost of debt is nothing%. (Round to two decimal places.) b.The cost of common equity is nothing%. (Round to two decimal places.) c.The cost of preferred stock is nothing%. (Round to two decimal places.) d.The after-tax cost of debt is nothing%. (Round to two decimal places.) Alevlerde con 16.00 berwy. The best of 12 10. The arra te per Arendo dende redenhed to grow Tercer perver. The price of a common stock row $27.50 Apred 1. do 30 percent, and 5100 per value, Abonding to yield 12. rower han pero The cost of our babe dic)
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(Individual or component costs of capital)Compute the cost of capital for the firm for the following:
a.A bond that has a
$1,000
par value (face value) and a contract or coupon interest rate of 11.0
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 tax rate is 34
percet. b.A new common stock issue that paid a
$1.80
dividend last year. The firm's dividends are expected to continue to grow at 7.0
percent per year, forever. The price of the firm's common stock is now $27.50.
c.A preferred stock that sells for
$125,
pays a dividend of 9.0
percent, and has a $100 par value. d.A bond selling to yield
12.0
percent where the firm's tax rate is 34
percent. a.The after-tax cost of debt is
nothing%.
(Round to two decimal places.) b.The cost of common equity is
nothing%.
(Round to two decimal places.) c.The cost of preferred stock is
nothing%.
(Round to two decimal places.) d.The after-tax cost of debt is
nothing%.
(Round to two decimal places.) Step by Step Solution
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