Question
Please help me solve this by hand without the use of excel. The company has 100,000 bonds with an 15% coupon rate, payable semiannually, 20
Please help me solve this by hand without the use of excel.
The company has 100,000 bonds with an 15% coupon rate, payable semiannually, 20 years to maturity, selling at $1,125 per bond. The company also has 1,500,000 shares of common stock outstanding. The stock sells for a price of $67 per share and has a beta of 1.8. Additionally, the company has 200,000 preferred shares outstanding, currently trading at $103 per share; with an annual dividend payment of $5.96. The market risk premium is 5% and the risk free rate is 3.2%. The tax rate is 21%.
What is the before-tax cost of debt?
What is the after-tax cost of debt?
What is the cost of preferred stock?
What is the cost of common stock?
What is the weighted average cost of capital?
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