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Use the following information for the next five (5) questions (assume tax rate = 35%). IF you could answer all 5 please with work!! especially

Use the following information for the next five (5) questions (assume tax rate = 35%). IF you could answer all 5 please with work!! especially show work for #5

Debt

50,000 bonds with 7.5 percent coupon rate, $1,000 par value, 20 years to maturity, selling for 96.3 percent of par; the bonds make annual coupon payments.

Common Stock

1,000,000 shares of common stock outstanding. The stock sells for a price of $50 per share and has a beta of 1.8.

Preferred Stock

150,000 shares of preferred stock outstanding selling for $110 per share with annual dividend payment of $8.

Market rates

Market return = 10% Risk Free Rate = 4%

1. The before tax cost of debt is:

a. 7.50%

b. $5,055,750

c. $5,305,167

d. 7.87%

2. The after tax cost of debt is:

a. 4.88%

b. $51.20

c. 5.12%

d. $500

3. The companys cost of common stock is:

a. 14.80%

b. 9.40%

c. $500

d. 28%

4. The companys cost of preferred stock is:

a. $1100 b. 7.27% c. 13.72% d. 7.96%

5. The WACC of the company is:

a. 103%

b. 8.68%

c. 9.65%

d. 11.72%

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