Price of the firm common stock

Reference no: EM13820313

Compute the cost of capital for the firm for the following:

1. A bond that has a $1,000.00 Par value (face value) and a contract or coupon interest rate of 10.7%.The bonds have a current market value of $1.126 and will mature in 10 years.The firms' marginal tax rate is 34%

2. A new common stock issue that paid a $1.81 dividend last year.The firms dividends are expected to continue to grow 6.7% per year forever. The price of the firm's common stock is now $27.93.

3. A preferred stock paying a 9.7% dividend on a $1.50 par value

4. A bond selling to yield 11.7% where the firm's tax rate is 34%.

Reference no: EM13820313

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