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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 aroseling to yield 8 21 porcont while the borrowing them's corporato tax rato is 34 percent b. Common stock for a firm that paid a 5103 dividend last year. The dividends are expected to grow at a rate of 43 percent per year into the foreseeable futuro The price of this stock is now $25 35 c. A bond that has a $1,000 par value and a coupon interest rate of 119 percent with interest paid somiannually A new issue would sell for $1 148 per bond and mature in 20 years. The firm's tax rate is 34 percent d. A preferred stock paying a dividend of 6.6 percent on a $93 par value if a new issue is offered the shares would sell for $84 11 per share a. The after-tax cost of debt debt for the firm is 3% (Round to two decimal places)
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