pcd stok pays an & percent dividend orn a $125 par value. However, the market price at which the preferred shares could be sold is only $90. 14-6. (Computing Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. Currently, new bond issues with a credit rating and maturity similar to those of b. Common stock for a firm that paid a $2.05 dividend last year. The dividends are c. A bond that has a $1,000 par value and a coupon interest rate of 12 percent with d. A preferred stock paying a 7 percent dividend on a $100 par value. If a new issue the firm's outstanding debt are selling to yield 8 percent, while the borrowing firm's corporate tax rate is 34 percent. expected to grow at a rate of 5 percent per year into the foreseeable future. The price of this stock is now $25. interest paid semiannually. A new issue would sell for $1, 150 per bond and ma- ture in 20 years. The firm's tax rate is 34 percent. is offered, the shares would sell for $85 per share