1. CER Corporation has 8.75 million shares of common stock outstanding, 215,000 shares of RM6 annual dividend preferred stock outstanding, and 105,000 of 7.5% semi-annual bond outstanding. The common stock is currently sells for RM34 per share and has a beta of 1.25, the preferred stock currently sells for RM91 per share, and the bonds have 15 years to maturity and sell for 93% of par. The market risk premium is 8.5%, T-bills are yielding 5%, and corporate tax rate is 35%. 
2. 
   
3. Calculate the following:
4. 
   (a) Firm’s market value capital structure. 
5. (b) Cost of equity. 
6. (c) Cost of preferred stock. 
7. (d) Cost of debt. 
8. (e) Weighted Average Cost of Capital (WACC).

Answer rating: 100% (QA)

To calculate the firms market value capital structure we need to determine the market values of each component of the capital structure a Firms Market ... View the full answer