Question: HBM , Inc has the following capital structure: Assets $ 4 0 0 , 0 0 0 Debt $ 1 0 0 , 0 0

HBM, Inc has the following capital structure:
Assets $ 400,000 Debt $ 100,000
Preferred stock 60,000
Common stock 240,000
The common stock is currently selling for $14 a share, pays a cash dividend of $0.80 per share, and is growing annually at 7 percent. The preferred stock pays a $9 cash dividend and currently sells for $93 a share. The debt pays interest of 8.0 percent annually, and the firm is in the 30 percent marginal tax bracket.
What is the after-tax cost of debt? Round your answer to two decimal places.
%
What is the cost of preferred stock? Round your answer to two decimal places.
%
What is the cost of common stock? Assume that the current $0.80 dividend grows by 7 percent during the year. Round your answer to two decimal places.
%
What is the firms weighted-average cost of capital? Round your answer to two decimal places.
%

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