Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It pays annual coupon payments and has a coupon rate of 3%. The bonds will mature in 20 years.  Stock price of Firm Z is $10, and there are 50 million shares outstanding. There are 2 million shares of preferred stock, which offers $2  dividend and is priced at $40. Equity beta of Firm Z is 1.5 and current market portffolio yields 8% and the risk free rate is 2%. Corproate tax rate is 30%. 

Find the costs of debt, equity, preferred stock and WACC?

Answer rating: 100% (QA)

To calculate the current outstanding debt of Firm Z we can multiply the number of bonds issued by the face value of each bond Outstanding debt 1000000 ... View the full answer