the last question) Debt 20 bonds with 8 % coupon rate. payable annually, $1.000 par value....

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Preferred Stock 110 preferred shares outstanding, currently trading at 5120 per share with an annual dividend payment of $7 M

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Answer 1

Answer #1

Cost of Common Equity

Cost of Common Equity = Risk-free rate + (Beta x Market risk premium)

Cost of Common Equity = 2.00% + (1.60 x 9.00%)

Cost of Common Equity = 2.00% + 14.40%

Cost of Common Equity = 16.40%

Hence, the Cost of Common Equity is 16.40%

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Answer 2

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