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What is its cost of preferred stock financing

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Question - Sunshine Superman Inc. has a capital structure of 50% debt, 30% common equity and 20% preferred stock and a tax rate of 40%. Its stock sells for $30 and has an expected dividend of $1.75 with a growth rate of 4%. Its preferred stock has a $2.25 dividend and sells for $25. Its debt has an interest rate of 7%.

What is its after-tax cost of debt?

What is its cost of retained earnings?

What is its cost of preferred stock financing?

What is its weighted average cost of capital?

Reference no: EM132969083

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