Question 9 The risk-free rate is 5%, the required return on an average stock is 10%, and Stock X has a beta of 2. The last dividend paid was $2.0, the expected growth rate is 5% and the current price is $20 Stock X is a) over-valued b) fairly-valued. c) under-valued. ABC's outstanding 5% coupon rate bonds mature in 10 years, and are selling for $900. The bonds make annual coupon payments. ABC preferred stock pays $2.00 dividend per share and sells for SS0 per share. ABC common has a beta of 1.1, the risk free rate is 3% and the expected return on the market is 8%. ABC's optimal capital structure is 30% debt, 10% preferred stock, and 60% common equity. Tax rate is 40% Question 10 Question 13 Question 11 Question 12 Calculate the after-tax cost of debt. Calculate the WACC. Calculate the cost of preferred stock Calculate the cost of common stock x a) 6.4% a) 4.0% a) 3.0% a) 6.6% b) 3.8% X b) 8.0% b) 8.0% b) 7.4% c) 5.0% C) 10.0% c) 8.5% c) 8.0%