What is the cost of preferred stock-cost of common stock

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Reference no: EM13953734

Given the following information for XYZ Co., you want to find the cost of capital (WACC). The firm’s tax rate is 40%. Ignore all the flotation cost. Debt: 8,000 7% coupon bonds outstanding, $1,000 par value, 15 years to maturity, selling for 98% of par; the bonds make semiannual payments. Preferred stock: 20,000 shares of 7% preferred stock outstanding, $100 par value, currently Common Stock: selling for $90 per share. 300,000 shares outstanding, selling for $50 per share; the beta is 1.25. Currently, the market risk premium is 6%, and the risk-free rate is 3%.

What is the cost of debt?

What is the cost of preferred stock?

What is the cost of common stock?

Given the above information, what is the cost of capital?

Reference no: EM13953734

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