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Please answer parts A-D P9-17 (similar to) : Question Help Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure
Please answer parts A-D
P9-17 (similar to) : Question Help Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital The weighted average cost is to be measured by using the following weights: 35% long-term debt 25% preferred stock, and 40% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 30%. Debt The firm can sell for $960 a 12-year, $1,000-par-value bond paying annual interest at a 8.00% coupon rate. A flotation cost of 2% of the par value is required in addition to the discount of $40 per bond. Preferred stock 8.50% (annual dividend) preferred stock having a par value of $100 can be sold for $75. An additional fee of $5 per share must be paid to the underwriters Common stock The firm's common stock is currently selling for $80 per share. The dividend expected to be paid at the end of the coming year (2016) is $4.01. Its dividend navments which hap heen annrnYImate v 7 % of earninns ner sharp in the nast 5 vears were as shown in he fn own nn tahle a. The after-tax cost of debt using the bond's yield to maturity is % Round to two decimal placesStep by Step Solution
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