(Individual component costs of capital)Compute the cost of capital for the firm for the following
a: A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 10.9%. Interest payments are $54.50. The bonds have a current market value of $1,120 and will mature in 10 years. The firm’s marginal tax rate is 34%
b: A new common stock issue that paid a $1.78 divided last year. The firm’s dividends are expected to continue to grow at 7.3% per year forever. The price of the firm’s common stock is now $27.65
c: A preferred stock that sells for $152 pays a dividend of 8.4% and has a $100 par value
d. A bond selling to yield 12.2% where the firms tax rate is 34%.