(Individual or component costs of capital) Compute the cost of capital for the firm for the following:
1) A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.9%. The bonds have a current market value of $1,126 and will mature in 10 years. The firm's marginal tax rate is 34%.
The cost of capital from this bond is ___%. (round to two decimal places).
2) A new common stock issue that paid a $1.82 dividend last year. The firm's dividends are expected to continue to grow at 7.1% per year forever. The price of the firm's common stock is now $27.67.
The cost of capital from this bond is ___%. (round to two decimal places).
3) A preferred stock paying a 8.9% dividend on a $143 par value.
The cost of capital from this bond is ___%. (round to two decimal places).
4) A bond selling to yield 12.1% where the firm's tax rate is 34%.
The cost of capital from this bond is ___%. (round to two decimal places).