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Problem 12: You work for a company with 30,000 of 4% coupon bonds, 20,000 $50 par $2.50 preferred stock, and 1,000,000 common shares outstanding with
Problem 12:
You work for a company with 30,000 of 4% coupon bonds, 20,000 $50 par $2.50 preferred stock, and 1,000,000 common shares outstanding with a market price of $22.00 per share and a required rate of return of 14%. What is the cost of the preferred stock if the stock trades at $45.00?
Problem 13(answer this question please): What is the cost of the debt if it trades at $1022 per bond?
All other issues are as in the above problem 12.
Please show all work.
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