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solve part 1-4 (Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has
solve part 1-4
(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 10.1 percent. Interest payments are $50.50 and are paid semiannually The bonds have a current market value of $1.121 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.81 dividend last year. The firm's dividends are expected to continue to grow at 6.6 percent per year, forever. The price of the firm's common stock is now $27.22 c. A preferred stock that sells for $139, pays a dividend of 8.6 percent, and has a $100 par value d. Abond selling to yield 12.1 percent where the firm's tax rate is 34 percent a. The after-tax cost of debt is %. (Round to two decimal places.) Step by Step Solution
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