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please answer without programmable calculator i swear i will upvote, please answer both quickly Q. 2 Cost of capital. Assume the following capital structure for
please answer without programmable calculator i swear i will upvote, please answer both quickly
Q. 2 Cost of capital.
Assume the following capital structure for Al Amal Company:
Bonds $ 40000
Preferred stock $15000
Common stock $45000
1- The firm can raise debt by selling 1,000 par value,10% coupon interest rate of 10 years bond.
to sell the issue, an average discount of $30 per bond must be given. The firm must also pay floatation cost of $ 20 per bond.
2- The firm can sell 11% (annual dividend) preferred stock at its par $100 per share. The cost of issuing and the selling preferred stock is expected to be $ 4 per bond.
3- The firms common stock is currently selling for $80 per share. The firm expects to pay cash dividends of $6 per share next year. The firms dividend have been growing at an annual rate of 6%. The stock will have to be under-priced by $4 per share, and flotation cost expected to amount to $ 4 per share.
4- Calculate the weighted average cost of capital for Al AmalCompany. ).
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