Question
This is an assignment I have, please how do I calculate the cost of capital? Debt:210,000 6.4 percent coupon bonds outstanding, 25 years to maturity,
This is an assignment I have, please how do I calculate the cost of capital?
Debt:210,000 6.4 percent coupon bonds outstanding, 25 years to maturity, selling or 108 percent of par; the bonds have $1000 par value each and make semi-annual payments
Common Stock:8,300,000 shares outstanding, selling for $68 per share; beta=1.1
Preferred Stock:450,000 shares of 4.5% preferred stock outstanding, selling or $81 per share
Market:7 percent expected market risk premium; 3.5 percent risk-free rate
1)Calculate the firm's current cost of capital using the information provided.
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