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PLEASE ANSWER A-E COMPLETELY!! THANK YOU Jake's Sound Systems has $7,560,000 of common stock outstanding at a market price of $65 a share. Its dividend
PLEASE ANSWER A-E COMPLETELY!!
Jake's Sound Systems has $7,560,000 of common stock outstanding at a market price of $65 a share. Its dividend next year is $2.2 and will grow at 5%. The flotation cost to this common stock is $6 per share. Jake's also has total $5,820,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest semi-annually, and mature in 5 years. The bonds are selling at 99% of face value, and the flotation cost is \$20 per share of bond. Jake's can issue preferred stock at $100 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share. The total value of preferred stocks is $1,620,000. The company's tax rate is 34%. (15) a. What is the after-tax cost of debt(5) b. What is the cost of equity (3) c. What is the cost of preferred stock ( 2 ) d. What are the weights used for WACC calculation? (3) e. What is the WACC? (2) THANK YOU
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