Question
Use the following information to answer the next five questions in the space provided: Debt 50,000 bonds with 7.0 percent coupon rate, $1,000 par value,
Use the following information to answer the next five questions in the space provided:
Debt | 50,000 bonds with 7.0 percent coupon rate, $1,000 par value, 10 years to maturity, selling for 98.1 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 $45 per share and has a beta of 2.00 |
Preferred Stock
| 200,000 shares of preferred stock outstanding, currently selling for $60.00 per share; with annual dividends of $5.00 |
Market
| percent market risk premium and 2 percent risk free rate. Marginal tax rate of 40% |
B4. The before tax cost of debt is:
B5. The after tax cost of debt is:
B6. The companys cost of common stock is:
B7. The companys cost of preferred stock is:
B8. The WACC of the company is:
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