Find the after-tax cost of debt-cost of preferred stock

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Reference no: EM131923752

The firm’s preferred shares sell for $60 per share, and they pay $6 each year in dividends. The firm does not plan to issue new preferred stock next year.

Find the cost of preferred stock.

The flotation cost for bonds is 15%, or $150 per $1000 face value. The marginal tax rate is 34%.

Find the after-tax cost of debt if McNeil issues new bonds priced at par with term to maturity of 5 years and a 10% coupon rate.

Find the WACC if internal equity is used. Find the WACC if external equity is used.

What is the breakpoint for equity?

Reference no: EM131923752

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