Question: 1 . The bonds are ( 8 % ) , annual coupon bonds, with 9 years to maturity and are currently selling

1. The bonds are \(8\%\), annual coupon bonds, with 9 years to maturity and are currently selling for \(90\%\) of par. 2. The company's common shares which have a book value of \(\$ 25\) per share are currently selling at \(\$ 20\) per share. 3. The preferred shares are \(5\%\) preferred shares with a book value of \(\$ 100\) per share. These shares are currently selling at \(\$ 80\) per share. 4. The company has an equity beta of 1.35 and the current Treasury bill rate is \(3.0\%\). The market risk premium is 1.5\%5. The company's tax rate is \(30\%\).
1 . The bonds are \ ( 8 \ % \ ) , annual coupon

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