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please give the answers for sub questions (Individual or component costs of capital) Compute the cost of capital for the firm for the following: a.
please give the answers for sub questions
(Individual or component costs of capital) 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 10.4 percent. Interest payments are $52.00 and are paid semiannually. The bonds have a current market value of $1,124 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.78 dividend last year. The firm's dividends are expected to continue to grow at 7.5 percent per year forever The price of the firm's common stock is now $27.77. c. A preferred stock that sells for $133, pays a dividend of 9.8 percent, and has a $100 par value. d. A bond selling to yield 12.5 percent where the firm's tax rate is 34 percent. a. The after-tax cost of debt is 5,61%. (Round to two decimal places.) b. The cost of common equity is %. (Round to two decimal places.)Step by Step Solution
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