HBM, Inc. has the following capital structure: The common stock is currently selling for $15 a share,

Question:

HBM, Inc. has the following capital structure:

The common stock is currently selling for $15 a share, pays a cash dividend of $0.75 per share, and is growing annually at 6 percent. The preferred stock pays a $9 cash dividend and currently sells for $91 a share.
The debt pays interest of 8.5 percent annually, and the firm is in the 30 percent marginal tax bracket.
a. What is the after-tax cost of debt?
b. What is the cost of preferred stock?
c. What is the cost of common stock?
d. What is the firm€™s weighted-average cost of capital?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...