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Manal Elkhoshkhany, Tutor
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# Compute the cost of capital for the firm for the following: A

### Resolved Question:

Compute the cost of capital for the firm for the following:
A A bond that has a \$1,000 par value (face value) and a contract or coupon interest rate of 11.4%. The bonds have a current value of \$1,121 and will mature in 10 years. The firm's marginal tax rate is 34%.

B.A new common stock issue that paid a \$1.78 dividend last year. The firm's dividends are expected to continue to grow at 6.5% per year forever. The price of the firms common stock is now \$27.59

C. A preferred stock paying a 8.5% dividend on a \$133 par value

D. A bond selling to yield 11.9% where the firm's tax rate is 34%
Submitted: 5 years ago.
Category: Finance
Expert:  Manal Elkhoshkhany replied 5 years ago.

Hello

Please post the full question as it appears in your book so that I can help

Regards,

Customer: replied 5 years ago.
Compute the cost of capital for the firm for the following:
A A bond that has a \$1,000 par value (face value) and a contract or coupon interest rate of 11.4%. The bonds have a current value of \$1,121 and will mature in 10 years. The firm's marginal tax rate is 34%.

The Cost of capital from this bond dent___%

B.A new common stock issue that paid a \$1.78 dividend last year. The firm's dividends are expected to continue to grow at 6.5% per year forever. The price of the firms common stock is now \$27.59

the cost of capital from common equity----%

C. A preferred stock paying a 8.5% dividend on a \$133 par value

the cost of preferred stock ---%

D. A bond selling to yield 11.9% where the firm's tax rate is 34%

the cost of capital from this bond debt--%
Expert:  Manal Elkhoshkhany replied 5 years ago.
What is the price of the preferred stock? There is missing data :)
Customer: replied 5 years ago.
this is all the information that it gives me and its looking for %
Expert:  Manal Elkhoshkhany replied 5 years ago.

I believe there is missing information, I will post the solution according to the given data, but I recommend that you email the instructor and tell him that the Current Price of Preferred Stock is not given. This is because if Preferred Stock is currently selling at par, then the cost of preferred stock is already given as 8.5%

Please advise the name of the book you are using: Title, author's name, and edition (is the question from the book?)

Expert:  Manal Elkhoshkhany replied 5 years ago.

Please click on the following link for the solution:

http://www.box.com/s/faab30e964af94bbeaac

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Thank you

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