(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 11.5 percent that is paid semiannually. The bond is currently selling for a price of $1,130 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 $1.74 dividend last year. The par value of the stock is $16, and the firm's dividends per share have grown at a rate of 8.6 percent per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $27.85.

d.A preferred stock paying a 9.1 percent dividend on a $129 par value. The preferred shares are currently selling for $148.88.

e.A bond selling to yield 12.4 percent for the purchaser of the bond. The borrowing firm faces a tax rate of 34 percent.