The cost of the company preferred stock-common stock

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Reference no: EM131347688

1—Given the following data, calculate the cost of the company’s preferred stock, common stock, and bonds.

Preferred stock: dividend = 1.50, price=10.00

Common stock: dividend=1.00, growth rate=5%, price=25.00

Bonds: coupon rate=6%, maturity=10 years, yield=7%, tax rate=32%

2—Given the costs you’ve calculated for the company’s sources of financing, now calculate the company’s weighted average cost of capital (WACC), assuming the following capital structure: The company raised $500 million of its money from bonds and $25 million each from common stock and preferred stock:

Reference no: EM131347688

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