Question

Barton Industries can issue perpetual preferred stock at a price of $49 per share. The stock would pay a constant annual dividend of $3.50 per share. If the firm's marginal tax rate is 40%, what is the company's cost of preferred stock? Round your answer to 2 decimal places.

5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? Round your answer to 2 decimal places. Do not round intermediate calculations.

Tunney Industries can issue perpetual preferred stock at a price of $57.50 a share. The stock would pay a constant annual dividend of $4.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

Answer 1

Annual Dividend on preferred stock Current Market Price of Preferred stock 3.5 ACD 7.14% Cost of Preferred Stock-

5 6 7 Cost of Debt(Semi annually) Annual Cost of Debt After tax cost of Debt -RATE((25-5)*2,(8%/2)*1600,-845.871600.) -F5*2 F6*(1-0.4)

Annual Dividend on preferred stock Current Market Price of Preferred stock 4.5 57.5 7.8390 Cost of Preferred Stock-