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. The following information are provided to you: Tax rate = 25%. 9-year, 10% coupon, semiannual payment noncallable bonds sell for $1,170.00. New bonds will
. The following information are provided to you: Tax rate = 25%. 9-year, 10% coupon, semiannual payment noncallable bonds sell for $1,170.00. New bonds will be privately placed with no flotation cost. 7% annual dividend, $100 par value perpetual preferred stock sells for $114.00. Common stock sells for $50. D0 = $4.20 and g = 4.7%. b = 1.2; rRF = 6%; RPM = 5.5%. Bond-Yield Risk Premium = 3.9%. Calculate the cost of debt (both pre-tax and after-tax cost of debt), cost of equity, and cost of preferred stock.
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