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What is the before-tax cost of debt

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Reference no: EM133057118

Use the information in the table below to answer the questions a - e.

Debt 

50,000 bonds with 7.0 % coupon rate, payable annually, $1,000 par value, 12 years to maturity, selling at $1,020 per bond. 

Common Stock 

1,000,000 shares of common stock outstanding. The stock sells for a price of $30 per share and has a beta of 1.3 

Preferred Stock 

100,000 preferred shares outstanding, currently trading at $120 per share; with an annual dividend payment of $9.00 

Market 

The market risk premium is 8.5% and the risk free rate is 2.5% 

Tax Rate 

30% 

What is the before-tax cost of debt? 

What is the after-tax cost of debt? 

What is the company's cost of preferred stock? 

What is the company's cost of common stock? 

Determine the company's weighted average cost of capital (WACC).

Reference no: EM133057118

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