Questions 46 through 49 are based on the following information: Phillips Equipment has the following financial information: Debt: 80,000 bonds that are selling at 102 ($1020 each); the bonds are 8.5% semi-annual 30-year bonds and were issued five years ago. Preferred Stock: 750,000 shares pay a $7.00 annual dividend per share of the preferred stock with a price of $65 per share. Common Stock: 2.5 million shares of common stock with a current price of $42 per share; the beta of the stock is 1.34; the standard deviation of the stock is 10.5%. Market: The US Treasury bill is yielding 2.8% and the expected return on the market is 11.2%. The corporate tax rate is 38%. What is the firm's pretax cost of debt?
4.15% |
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8.31% |
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8.50% |
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8.24% |
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8.52% |
What is the firm's cost of equity?
8.71% |
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14.51% |
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15.01% |
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17.81% |
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14.06% |
What is the firm's cost of preferred stock?
4.3% |
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4.6% |
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6.6% |
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7.0% |
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10.8% |
What is the firm's WACC?
9.8% |
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10.3% |
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11.0% |
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11.4% |
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12.7% |
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