Bond has 1000 par value and contract/coupon interest rate 10.1%. Bond has current market value 1120 and will mature in 10 yrs. firms marginal rate 34%.

 

New common stock issue paid 1.83 dividend last year. firm's dividend expected to continue to grow at 7.6% forever.Price of current stock now 27.73

a preferred stock paying 8.5% dividend on $152 par value.

bond selling to yield 11.2% where the firm's tax rate is 34%

 

A bond that has 1000 par value and a contract/coupon interest rate of 10.1%. the bonds have a current market value of 1120 and will mature in 10 yrs. firms marginal tax rate is 34% 

The cost of capital from this bond debt is ____%?

 

 

    • 7 years ago
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