Question: I'd like help with question 4 please. I don't have a financial calculator. Can the problem be solved using simple math? Without excel? 1. Pure
1. Pure Michigan issued a bond with the following features Maturity: 15 years Coupon rate 7.0% per annum, but paid semi-annually Par Value: $1,000 Each bond was sold today for $913.54 but had to pay 4.0% flotation expenses. A total of 328 bonds were sold. What is the BEFORE-TAX Cost of DEBT? (Make sure to annualize the rate] 2. Pure Michigan also issued the following Preferred Stock: Coupon rate 6.0% per annum, and paid annually Par Value: $100 Each preferred was sold at $101 but had to pay 2.0% flotation expenses A total of 990 Preferred Stocks are outstanding What is the cost of Preferred Stock? [Make sure you enter annualized cost] . 3. Pure Michigan also issued Common Stocks. Common Stocks were sold at $35.00 per share but had to pay 9.0% in flotation expenses. A total of 17,143 shares are outstanding Dividend just paid = $3.25 Dividend Payout ratio = 30.0% ROE: 7.5% What is the cost of equity? 4. What is Pure Michigan's Cost of Capital (WACC)? Their marginal tax rate = 30.0%
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