1. Leaf has preferred stock selling for 96.6 percent of par that pays a 10.4 percent annual coupon. what would be Leaf component cost of preferred stock?
2. The Black Bird Company plans an expansion. The expansion is to be financed by selling $139 million in new debt and $72 million in new common stock. The before-tax required rate of return on debt is 6.87% percent and the required rate of return on equity is 16.25% percent. If the company is in the 34 percent tax bracket, what is the weighted average cost of capital?
3. A 4-year bond pays interest annually. Its par value is $1,000 and its coupon rate equals 6%. If the market’s required return on the bond is 7 percent, what is the bond’s market price?