Compute the cost of capital for the firm

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Reference no: EM131585085

?(Individual or component costs of? capital) Compute the cost of capital for the firm for the? following: a. A bond that has a ?$1,000 par value? (face value) and a contract or coupon interest rate of 11.6 percent. Interest payments are ?$58.00 and are paid semiannually. The bonds have a current market value of ?$1,130 and will mature in 10 years. The? firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a ?$1.84 dividend last year. The? firm's dividends are expected to continue to grow at 6.1 percent per? year, forever. The price of the? firm's common stock is now ?$27.73. c. A preferred stock that sells for ?$126?, pays a dividend of 9.3 ?percent, and has a? $100 par value. d. A bond selling to yield 12.9 percent where the? firm's tax rate is 34 percent.

Reference no: EM131585085

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