What is the before tax cost of debt

What is the cost of preferred stock

What is the cost of common equity

2:15:56 Evan Desjardins: Attempt 1 Information Gizmo Inc has outstanding 5 year bonds with a 12% coupon rate, annual payments selling for s1,300. Its preferred stock is selling for $150 and pays a fixed dividend of $12. Gizmo Inc. common stock is selling for $200 and has a beta of The risk free rate is 5% and the expected return o the market is 12%. The target Capital structure calls for 40% debt, 20% Preferred Stock, and 40% Common Equity. Gizmo Inc. is considering the purchase of a new machine for 200,000. It will be depreciated using the MACRs 3 year class [33%, 45%, 15% and 7%] and can be used for three years at which time it will have a market value of s30,000 purchase of the new machine will cause an increase in net operating working capital by $10,000. Sales are expected to increase by 5t00,000 per year. The new machine will be depreciated using the MACRS 3-year class life. The firm has a marginal tax rate of 40%. Question 11 (1 point) What is the before-tax cost of debt? O 12.0% 5.1% 3.0% Save