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(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
(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 796 percent while the borrowing firm's corporate tax rate is 34 percent. b. Common stock for a firm that paid a 51 05 dividend last year The dividends are expected to grow at a rate of 5.2 percent per year into the foreseeable future. The price of this stock is now $25.05. c. A bond that has a 51.000 par value and a coupon interest rate of 112 percent with interest paid semiannually. A new issue would sell for $1,151 per bond and mature in 20 years. The firm's tax rate is 34 percent d. A preferred stock paying a dividend of 65 percent on a $99 par value. If a new issue is offered the shares would sell for 585.88 per share a. The after-tax cost of debt debt for the film is 0% (Round to two decimal places) b. The cost of comman equity for the fim is 1% Round to two decimal places) c. The after-tax cost of debt for the firm is 1% (Round to two decimal places.) d. The cost of preferred stock for the firm is 11% Pound to two decimal places)
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