The firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions: Source of Capital Long-term debt Preferred stock Common stock equity Target Market Proportions 30% 5 65 Debt: The firm can sell a 10-year, $1,000 par value, 5 percent bond for $980. A flotation cost of 2 percent of the face value would be required in addition to the discount of $20. Preferred Stock: The firm has determined it can issue preferred stock at $65 per share par value. The stock will pay an $8.00 annual dividend. The flotation cost stock is $8 per share. Common Stock: The firm's common stock is currently selling for $60 per share. The dividend expected to be paid at the end of the coming year is $5.07. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $2.45. It is expected that to sell, a new common stock issue must be underpriced at $1 per share and the firm must pay $3 per share in flotation costs. The firm pays 40 percent taxes on ordinary income and capital gains. And invest $5,000 in NWC.

what is the optimal capital structure

Workshect The firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions: Debt: The firm can sell a 10-year, $1,000 par value, 5 pereent bond for $980. A flotation cost of 2 percent of the face valoe would be required in addition to the discount of $20. Preferred Stock: The firm has determined it can issue preferred stock at 565 per share par value. The stock will pay an 58.00 annual dividend. The flotation cost stock is $8 per share. Common Stock: The firm's common stock is currently selfing for $60 per share. The dividend expected to be paid at the end of the coming year is $5,07, Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was \$2.45. It is expected that to sell, a new common stock issue must be underpriced at 51 per share and the firm must pay $3 per share in flotation costs. The firm pays 40 percent taxes on ordinary income and capital gains. And invest $5,000 in NWC