Question: a firm has determined its optimal structure which is composed of the following sources and target market value proportions long term debt 60% comminstock equity
a firm has determined its optimal structure which is composed of the following sources and target market value proportions long term debt 60% comminstock equity is 40 debt : the firm can sell a 15 years $1000 par value 8 present bond for 1070 common stock: a firm`s common stock is currently selling for 72 per share. the dividend expected to be paid at the end of the coming year $5. Its dividend payments have been growing at a constant rate of 10% for the last five years Additionally, the firm has a marginal tax rate of 40% question: 1. the firms before tax cost of debt is? 2. the firm`s after tax cost of debt is? 3. the firms cost of s new issued of common stock is? 4. assuming the firm plans to pay out all of its earnings as dividends, the weighted average cost of capital is?
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