What is the firm weighted-average cost of capital

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HBM, Inc. has the following capital structure: Assets: $400,000, Debt: $140,000, Preferred Stock: $20,000, Common Stock: $240,000. The common stock is currently selling for $15 a share, pays a cash dividend of $0.75 per share, and is growing annually at 6%. The preferred stock pays a $9 cash dividend and currently sells for $91 a share. The debt pays interest of 8.5% annually, and the firm is in the 30% marginal tax bracket.

a.) What is the after-tax cost of debt? b.) What is the cost of preferred stock? c.) What is the cost of common stock? d.) What is the firm's weighted-average cost of capital?

 

Reference no: EM13299827

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