Question

(Individual

or component costs of

capital​)

Compute the cost of the​ following:

. A preferred stock paying a dividend of

12

percent on a

​$150

par value. If a new issue is​ offered, flotation costs will be

9

percent of the current price of

​$163

e. A bond selling to yield

12

percent after flotation​ costs, but before adjusting for the marginal corporate tax rate of

33

percent. In other​ words,

12

percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows​ (principal and​ interest).

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE