Expert Solutions

Compute the cost of capital for the firm for the following:

A bond that has $1000 par value(Face Value) and a contract or coupon interest rate of 10.1%. The bonds have a current market value of $1,128 and will mature in 10 years. The firm’s marginal tax rate in 34%? a. The cost of capital from this bond debt is
A new common stock issue that paid a $1.76 dividend last year. The firms dividends are expected to continue to grow 7.5% per year forever. The price of the firm’s common stock is now $27.67.

A prefered stock paying a 9.2% dividend on a $155 par value.
A bond selling to yeild 12.5% where the firm’s tax rate is 34%