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Use the following information to answer questions 22-25: Sweet Home Corp.'s capital structure consists of four main sources of finances: 1.common stock: 50 million shares

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Use the following information to answer questions 22-25: Sweet Home Corp.'s capital structure consists of four main sources of finances: 1.common stock: 50 million shares trading at $20;=1.3 2.Preferred stock: 5 million shares with $0.9 dividends trading at $10. 3.Bank loan: a variable rate bank clone of $425 million priced at 7.5% 4.Public debt: 500,000 high quality bonds with $1000 par value, 12% coupon trading at 105 (Bond quote) with a YTM of 7.5%. The marginal tax rate is 40%, risk free rate is 5%, MRP is 6.8%. 22. The cost of common equity for Sweet Home Corp. is a. 13.84% b. 11.8% c. 4.50% d. 9.35% 23. The cost of preferred equity for Sweet Home Corp. is a. 13.84% b. 11.8% c. 4.50% d. 9.00% 24. The after-tax cost of debt for Sweet Home Corp is a. 13.84% b. 4.50% c. 9.00% d. 9.38% 25. Sweet Home's WACC is a. 8.33% b. 7.75% c. 10.71% d. 9.28%

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