Question
The Heuser Company's currently outstanding bonds have a 8% coupon and a 13% yield to maturity. Heuser believes it could issue new bonds at par
The Heuser Company's currently outstanding bonds have a 8% coupon and a 13% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is Heuser's after-tax cost of debt? Round your answer to two decimal places.
Tunney Industries can issue perpetual preferred stock at a price of $71.00 a share. The stock would pay a constant annual dividend of $6.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.
Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 13.50%. What is Percy's cost of common equity? Round your answer to two decimal places.
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