Question: A firm has determined its optimal capital structure, which is comprised of the following sources and target market value proportions: Source of capital Long term

 A firm has determined its optimal capital structure, which is comprised

A firm has determined its optimal capital structure, which is comprised of the following sources and target market value proportions: Source of capital Long term debt Preferred stock Common stock equity target market proportions 30% 5 65 Debt: The firm can sell a 20-year, $1000 par value, 9 percent bond for $970. Interest is payable annually Preferred Stock: The firm has determined it can issue preferred stock at S65 per share. The stock will pay an $8.00 annual dividend Common Stock. The firm's common stock is currently selling for $40 per share. The dividend expected to be paid at the end of the coming year is $3.00. Its dividend payments have been growing at a constant rate of 5%. Additionally, the firm's marginal tax rate is 40 percent. What are the firm's after-tax cost of debt, cost of preferred stock, cost of common stock, and the weighted average cost of capital

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