Reference no: EM132489984

Question 1: Pearson Motors has a target capital structure of 30% debt and ?0% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 11.00%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places

Question 2: Hook Industries's capital structure consists solelyI of debt and common equity. It can issue debt at rd = 9%, and its common stock currentl‘iur pays a $3.25 dividend per share {Do = $3.25). The stock's price is currently $2135, its dividend is expected to grow at a constant rate of 3% per year, its tax rate is 25%, and its WACC is 12.35%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places

Question 3: Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $109.00, but flotation costs will be 5% of the market price, so the net price will be $103.55 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places.