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The ACME Toy Company has the following information. Computer the cost of capital for each. Use the Excel formulas (RATE, PV, etc, where needed) a.
The ACME Toy Company has the following information. Computer the cost of capital for each. Use the Excel formulas (RATE, PV, etc, where needed) a. It has $1,000 par value bond with a 10% annual coupon rate and a 20 year maturity. The investors require a 15% rate of return. Compute the market value of the bonds and the after -tax cost if the tax rate is 21% and you can buy the bond for $950 b. ACME's common stock paid a $1.50 dividend last year. In addition, their dividends are growing at 5% per year. The price of this stock is currently $95.00. Compute the cost of this capital. c. ACME's preferred stock is payinng a 11% dividend on a $100 par value. The market price of shares is currently $130.00/ share. Compute the cost of this capital. d. Using a cost of debt at 6% and a tax rate of 21% compute the cost of debt. Part c Part d
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