Solution-Compute the cost of debt-cost of equity

Compute the cost of debt-cost of equity

Reference no: EM132491438

Bonds: 12,000 7.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 108 percent of par; the bonds make semi-annual payments.

Preferred stock: 45,000 shares of 5.75 percent preferred stock outstanding with a $100 par, currently selling for $60 per share.

Common stock: 525,000 shares outstanding, selling for $48 per share; beta is 1.60.

Market: 5.5 percent market risk premium and 3.5 percent risk-free rate.

Tax rate: 35 percent.

Compute the cost of debt, cost of equity, cost of preferred stock and the WACC.

Reference no: EM132491438

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Compute the cost of debt-cost of equity

Reference no: EM132491438

Reference no: EM132491438

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