Question

?(Individual or component costs of? capital)?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 10.3 percent. Interest payments are ?$51.50 and are paid semiannually. The bonds have a current market value of ?$1,128 and will mature in 10 years. The? firm's marginal tax rate is 34 percent.

b. A new common stock issue that paid a ?$1.82 dividend last year. The? firm's dividends are expected to continue to grow at 7.4 percent per? year, forever. The price of the? firm's common stock is now ?$27.35.

c. A preferred stock that sells for ?$132?, pays a dividend of 8.5 ?percent, and has a? $100 par value.??

d. A bond selling to yield 11.9 percent where the? firm's tax rate is 34 percent.