Bond coupon rate 11% Bond yield to maturity 9% Dividend, expected common $ 5.00 Dividend, preferred $ 12.00 Price, common $ 60.00 Price, preferred $ 106.00 Flotation cost, preferred $ 4.50

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Given the following information:

Percent of capital structure:

Debt 35%
Preferred stock 20
Common equity (retained earnings) 45

Additional information:

Bond coupon rate 11%
Bond yield to maturity 9%
Dividend, expected common $ 5.00
Dividend, preferred $ 12.00
Price, common $ 60.00
Price, preferred $ 106.00
Flotation cost, preferred $ 4.50
Growth rate 6%
Corporate tax rate 25%

Calculate the Hamilton Corporation's weighted cost of each source of capital and the weighted average cost of capital.

Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.

 
 
 
 
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