(Individual or component costs of capital Compute the cost of the following: a. A bond that has $1,000 par value (face v

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(Individual or component costs of capital Compute the cost of the following:
a. A bond that has $1,000 par value (face value) and a contract or coupon interest rate of 11 percent. A new issue would have a floatation cost of 9 percent of the
b1.1/0 maret valu ne
bonds mature in b years. Ihe
firm's average tax rate Is
3U percent and its marginal tax rate Is 33 percent
b. A new common stock issue that paid a $1.40 dividend last ear. The par value of the stock is $15, and earnings per share have grown at a rate of 11 percent pe
year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant dividend-earnings ratio of 30 percent. The price of this
stock is now $23. but 6 percent flotation costs are anticipated.
c. Internal common equitv when the current market price of the common stock is $44. The expected dividend this comina vear should be $3.30. increasina thereafte
at an annual growth rate of 8 percent. The corporation's tax rate
33 nercent
d. A preferred stock paying a dividend of 11 percent on a $140 par value. It a new issue is offered, flotation costs will be 15 percent of the current price of $168
e. A bond selling to veld 11 percent after flotation costs, but betore adjustina for the marqinal corporate tax rate of 33 percent. In other words, 11 percent is the rate
that equates the net proceeds from the bond with the present value of the future cash flows (principal and interest)
What Is the firm's after-tax cost of debt on the bond?
(% (Round to two decimal places.)
D. What Is the cost of external common equity:
I% (Round to two decimal places.)
c. What Is the cost or internal common equily!
1% (Round to two decimal places.)
d. What is the cost of capital for the preferred stock?
% (Round to two decimal places.)
e. What Is the after-tax cost of debt on the bond?
I% (Round to two decimal olaces.)