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HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 270,000 Preferred stock 90,000...

HBM, Inc has the following capital structure:

Assets $ 600,000 Debt $ 270,000
Preferred stock 90,000
Common stock 240,000

The common stock is currently selling for $17 a share, pays a cash dividend of $0.95 per share, and is growing annually at 8 percent. The preferred stock pays a $8 cash dividend and currently sells for $86 a share. The debt pays interest of 6.5 percent annually, and the firm is in the 30 percent marginal tax bracket.

  1. What is the after-tax cost of debt? Round your answer to two decimal places.

      %

  2. What is the cost of preferred stock? Round your answer to two decimal places.

      %

  3. What is the cost of common stock? Assume that the current $0.95 dividend grows by 8 percent during the year. Round your answer to two decimal places.

      %

  4. What is the firm’s weighted-average cost of capital? Round your answer to two decimal places.

      %

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