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Issuance of new debt

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Each of Bonanza Gold's common stock sells for $ 32. The Bonanza investment bank charges 6.5% for floating costs when new common shares are issued. The company expects to pay a dividend of $ 3.36 per share.

By the end of the year. If the cost of Bonanza's retained earnings is 15.5%, what is the cost of the new common stock capital?

Amount of debt issued Yield to maturity, rd
$ 1 - $ 450,000 4.5%
450,001 - 750,000 5.8
Over 750,000 6.5

If Tropical's capital structure is made up of 60% debt, which WACC breakpoints are associated with the issuance of new debt?

Reference no: EM132546389

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