Capital structure is
- 40% debt,
- 10% preferred stock, and
- 50% common equity
|
|
| Common stock currently sells for |
$35.00 |
| The expected CS dividend is |
$1.50 |
| Growth rate is |
7.00% |
| Flotation cost on CS |
$1.45 |
| Flotation cost on PS |
$1.10 |
| Preferred stock sells for |
$48.00 |
| PS pays a dividend of |
$4.00 |
| Market yield on bonds is |
9.75% |
| Tax rate is |
34.00% |
Calculate the firm's cost of debt Select one: A. 8.53% B. 6.44% C. 11.29%
Capital structure is
- 40% debt,
- 10% preferred stock, and
- 50% common equity
|
|
| Common stock currently sells for |
$45.00 |
| The expected CS dividend is |
$2.00 |
| Growth rate is |
6.00% |
| Flotation cost on CS |
$2.25 |
| Flotation cost on PS |
$1.10 |
| Preferred stock sells for |
$50.00 |
| PS pays a dividend of |
$4.00 |
| Market yield on bonds is |
11.25% |
| Tax rate is |
34.00% |
Calculate the firm's cost of preferred stock Select one: A. 7.43% B. 8.18% C. 10.44%