Estimate a company cost of capital

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Question - Estimate a company's cost of capital based on 32% tax rate and the following:

-Company's $8 million, 10% coupon, semi-annual payment, non-callable bonds, with 12 years left to maturity are currently trading at 0.96.

-Company's 50,000 preferred stock are currently trading at $22 each when the par value is $20 and there's 5% annual dividend.

-Company's 250,000 common stock are currently trading at $40 per share. Its most recent quarterly dividend was $0.50 per share, which is expected to grow at a constant rate of 4%. Its beta is 1.1 and treasury yield and the market risk premium are 2.5% and 6%, respectively.

Based on your above calculation, provide the best estimate of the company's EPS, Net Income, EBIT and FCF and comment on its growth rate.

Reference no: EM132982304

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