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The cost of common equity for the firm

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Reference no: EM131020638

CurrntCompute the cost of capital for the firm for the following.

a) currently bonds with a similar credit rating and maturity as the firm's outstanding deb are selling to yield 7.44 percent while the borrowing firm's corporate tax rate s 34 percent.

b) Common stock for a firm that paid a 1.08 dividend last year. The dividends are expected to grow at a rate of 4.4 percent per year in to the foreseable future. The price of this stock is now $ 25.23

C) a Bond that has a $ 1000 par value and a coupon interest of 11.6 percent with interest paid semiannually. A new issue would sell for $ 1148 per bond and mature in 20 years. The firm tax rate is 34 percent.

D) a preferred stock paying dividend of 6.3 percent on a $ 91 par value. If a new issue is offered, the shares woud sell for $ 83.81 per share.

A) The after-tax cost of debt debt for the firm is ......( round two decimal)

B) The cost of common equity for the firm is ......(.round two decimal)?

C) The after tax cost of debt for the firm is ......(?round two decimal )

D) The cost of preferred stock for the firm is .....?( round two decimal)

Reference no: EM131020638

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