firm z has issued 1000000 bonds. each bond is priced at $929 and has a face value of $1000. it pays annual coupon payments and has a coupon rate of 3%. the bonds will mature in 20 years. stock price of firm z is $10, and there are 50 million shares outstanding. there are 2 million shares of preferred stock, whoch offers $2 dividend and is priced at $40. equity beta of firm z is 1.5 and current market portfolio yields 8% and the risk free rate is 2%. corporate tax rate is 30%. find the costs of debt, equity, preferred stock and WACC

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.