What is the firm cost of equity

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Reference no: EM132073007

1. Calculate the weighted average cost of capital for the following firm: it has $600000 in debt, $400000 in common stock and $200000 in preferred stock. It has a 4% cost of debt, 14% cost of common stock, 12% cost of preferred stock and a 34% tax rate.

2. Last week, Lester's Electronics paid an annual dividend of $2.25 on its common stock. The company has a longstanding policy of increasing its dividend by 3.5 percent annually. This policy is expected to continue. What is the firm's cost of equity if the stock is currently selling for $40.95 a share ?

Reference no: EM132073007

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