Reference no: EM131261484
(Individual or component costs of? capital) Compute the cost of capital for the firm for the? following:
a. Currently bonds with a similar credit rating and maturity as the? firm's outstanding debt are selling to yield 7.64 percent while the borrowing? firm's corporate tax rate is 34 percent.
b. Common stock for a firm that paid a $1.02 dividend last year. The dividends are expected to grow at a rate of 5.5 percent per year into the foreseeable future. The price of this stock is now $24.03.
c. A bond that has a $1,000 par value and a coupon interest rate of 12.9 percent with interest paid semiannually. A new issue would sell for $1,150 per bond and mature in 20 years. The? firm's tax rate is 34 percent.
d. A preferred stock paying a dividend of 7.6 percent on a $100 par value. If a new issue is? offered, the shares would sell for $85.75 per share.
a. The? after-tax cost of debt debt for the firm is _________?%.(Round to two decimal? places.)
b. The cost of common equity for the firm is ____________?%. (Round to two decimal? places.)
c. The? after-tax cost of debt for the firm is _________?%. (Round to two decimal? places.)
d. The cost of preferred stock for the firm is _________?%. ?(Round to two decimal? places.)
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