(Individual or component costs of capital)Compute the cost of capital for the firm for the following:

a.A bond that has a

$1 comma 0001,000

par value (face value) and a contract or coupon interest rate of

11.011.0

percent. Interest payments are

$55.0055.00

and are paid semiannually. The bonds have a current market value of

$1 comma 1251,125

and will mature in

1010

years. The firm's marginal tax rate is

3434

percet.b.A new common stock issue that paid a

$1.801.80

dividend last year. The firm's dividends are expected to continue to grow at

7.07.0

percent per year, forever. The price of the firm's common stock is now

$27.5027.50.

c.A preferred stock that sells for

$125125,

pays a dividend of

9.09.0

percent, and has a $100 par value.d.A bond selling to yield

12.012.0

percent where the firm's tax rate is

3434

percent.

a.The after-tax cost of debt is

5.995.99%.

(Round to two decimal places.)b.The cost of common equity is

nothing%.

(Round to two decimal places.)