What is bad boys cost of capital

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Bad boys inc is evaluating its cost of capital under consultation. Bad boys inc expects to issue new debt at 8% par with a coupon rate of 8% and to issue new preffered stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys is currently selling at $20 a share. Bad Boys Inc expects to pay a dividend of $1.50 a share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. Bad boys inc marginal tax rate is 35%. If Bad Boys Inc raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys cost of capital?

Reference no: EM131627600

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