Reference no: EM132488940

The capital structure for the First Pacific Corporation is provided below. The company plans to maintain its debt structure in the future. The firm has bonds that pay a 6% coupon rate, mature in 10 years and sell for $1,095. The preferred stock is selling for $47 and pays a $3.50 dividend. The common stock is selling for $35, just paid a $1.85 dividend and is expected to grow by 6% for the indefinite future. The firm's marginal tax bracket is 34%.

Question 1: What is FP's weighted average cost of capital? What is the after tax cost of debt? What is the after tax cost of preferred stock? What is the after tax cost of common stock? Show all work.

CAPITAL STRUCTURE                   ($000)

Bonds                                 $ 160,000

Preferred Stock                      $ 50,000

Common Stock                      $ 350,000