Question
You are given the following information for the Buster Bronco company. There are 9700 bonds outstanding with a 7 percent coupon, $1,000 par value, 21
You are given the following information for the Buster Bronco company. There are 9700 bonds outstanding with a 7 percent coupon, $1,000 par value, 21 years to maturity, semiannual payments, and are selling for 105 percent of par. There are 2300 shares of 4.5 percent preferred stock outstanding with a $100 par value and a current price of $97 per share. There are 57,000 shares of common stock outstanding, trading at $73 per share, with a 1.46 beta. The United States has a 21% corporate tax rate, a T-bill return of 4.78 percent, and a 14.5% expected equity market return
What is the cost of preferred equity? (percentage)
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