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URGENT PLEASE HELP (Individual or component costs of capital) Compute the cost of capital for the firm for the following a. Currently bonds with a
URGENT PLEASE HELP
(Individual or component costs of capital) Compute the cost of capital for the firm for the following a. Currently bonds with a similar credit rating and maturity as the firm's outstanding debt are selling to yield 7.47 percent while the borrowing firm's corporate tax rate is 34 percent. b. Common stock for a firm that paid a $1.03 dividend last year. The dividends are expected to grow at a rate of 4.2 percent per year into the foreseeable future. The price of this stock is now $24.18. c. A bond that has a $1,000 par value and a coupon interest rate of 11.5 percent with interest paid semiannually A new issue would sell for $1.153 per bond and mature in 20 years. The firm's tax rate is 34 percent d. A preferred stock paying a dividend of 75 percent on a $108 par value If a new issue is offered the shares would sell for $86.81 per share Step by Step Solution
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