Long-term debt and current yield to maturity

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Reference no: EM131043841

Assuming you are the financial manager of a for-profit hospital, what is the hospital's cost of capital assuming that the hospital has the following capital structure on its Statement of Financial Position (SFP; also known as a Balance Sheet):

Long-Term Debt: $300M; current Yield to Maturity (YtM) of 6.5%, selling at par.

Preferred Stock: $200M; coupon yield of 10%, currently selling below face value at $9,975 for every $10,000 bond.

Common Stock: $700M; par value of $5 per share; current price of $70 per share, dividend of $12 per share.

Tax rate: 41.5%

Reference no: EM131043841

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