(Individual or component costs of capital)Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, 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 12.8 percent that is paid semiannually. The bond is currently selling for a price of $1,125 and will mature in 10 years. The firm's tax rate is 34 percent.

b. If the firm's bonds are not frequently traded, how would you go about determining a cost of debt for this company?

c.A new common stock issue that paid a $1.73 dividend last year. The par value of the stock is $16, and the firm's dividends per share have grown at a rate of 7.1 percent per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $27.86

. d.A preferred stock paying a 9.1 percent dividend on a $128 par value. The preferred shares are currently selling for $ 146.71

. e.A bond selling to yield 12.9 percent for the purchaser of the bond. The borrowing firm faces a tax rate of 34 percent

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a.Compute the cost of capital for the firm with a bond that has a

$1,000 par value (face value) and a contract or coupon interest rate of 12.6 % that is paid semiannually. The bond is currently selling for a price of $1,118. and will mature in 10 years. The firm's tax rate is 34%

b.If the firm's bonds are not frequently traded, how would you go about determining a cost of debt for this company?

CCompute the cost of capital for the firm with a new common stock issue that paid a $1.78 dividend last year. The par value of the stock is $16 and the firm's dividends per share have grown at a rate of 8.48% per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $28.56.

D. Compute the cost of capital for the firm with a preferred stock paying a 10.2% dividend on a $123 par value. The preferred shares are currently selling for $152.35

E. Compute the cost of capital for the firm with a bond selling to yield.13.7% for the purchaser of the bond. The borrowing firm faces a tax rate of 34%.

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