Question

Use the following information to answer the next five questions in the space provided:

Debt	50,000 bonds with 7.0 percent coupon rate, $1,000 par value, 10 years to maturity, selling for 98.1 percent of par; the bonds make annual coupon payments
Common Stock	1,000,000 shares of common stock outstanding. The stock sells for a price of $45 per share and has a beta of 2.00
Preferred Stock	200,000 shares of preferred stock outstanding, currently selling for $60.00 per share; with annual dividends of $5.00
Market	percent market risk premium and 2 percent risk free rate. Marginal tax rate of 40%

B4. The before tax cost of debt is:

B5. The after tax cost of debt is:

B6. The company’s cost of common stock is:

B7. The company’s cost of preferred stock is:

     B8. The WACC of the company is:

Answer 1