A. The Holmes Company's currently outstanding bonds have an 8% coupon and an 11% yield to maturity. Holmes believes it c

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A. The Holmes Company's currently outstanding bonds have an
8% coupon and an 11% yield to maturity. Holmes believes it could
issue new bonds at par that would provide a similar yield to
maturity. If its marginal tax rate is 25%, what is Holmes'
after-tax cost of debt? Round your answer to two decimal
places.
%
B. Torch Industries can issue perpetual preferred stock at
a price of $68.00 a share. The stock would pay a constant annual
dividend of $5.50 a share. What is the company's cost of preferred
stock, rp? Round your answer to two decimal places.
%
C. Pearson Motors has a target capital structure of 40%
debt and 60% common equity, with no preferred stock. The yield to
maturity on the company's outstanding bonds is 11%, and its tax
rate is 25%. Pearson's CFO estimates that the company's WACC is
12.30%. What is Pearson's cost of common equity? Do not round
intermediate calculations. Round your answer to two decimal
places.
%