Calculate the before tax cost of debt rd cost of equity


Suppose you are given the following information for the Catch-them-all Inc.

Debt: 23,000 bonds outstanding, with a face value of $2,000. The bonds currently trade at 81.125% of par value, and have 30 years to maturity. The coupon rate equals 3%, and the bonds make semi-annual coupon payments.

Common stock: 825,000 shares of common stock outstanding; currently trading for $62.55 per share. The firm just paid a dividend of $3.94 per share, and dividends are expected to grow at 2% per year, forever.

Preferred stock: 150,000 shares of preferred stock outstanding; currently trading for $107.5 per share; pays a $4.82 dividend every year.

Tax rate: 35%

Calculate the before tax cost of debt (Rd), cost of equity capital, capital structure weight of debt, and weighted average cost of capital. (Enter percentages as decimals and round to 4 decimal places)

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Calculate the before tax cost of debt rd cost of equity
Reference No:- TGS02347168

Expected delivery within 24 Hours