Reference no: EM131187944
Use the following information to answer the next five questions.
Debt : 200,000 bonds with 7 percent coupon rate, $1,000 par value, 15 yr to maturity, selling to maturity, for 98.6 percent of par; the bonds have annual coupons.
Common Stock : 750,000 shares of common stock outstanding. The stock sells for $45/share and has a beta of 1.10
Preferred Stock: 50,000 shares of preferred stock outstanding, currently selling for per share; with annual $100/share and with an annual dividend of $7.00
Market: 6 percent market risk premium and 3 percent risk free rate. Corporate Tax Rate: 35%.
1) The before tax cost of debt is: . . 2) The after tax cost of debt is: . . 3) The company’s cost of common stock is: . . 4) The company’s cost of preferred stock is: . . 5) The WACC of the company is:
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