The BEAR Company has 2000 bonds outstanding that have a market price of $1195 each and a face value of $1000. floatation cost is 0.015 the bond pays coupon of 0.055 quarterly  for  12  years. The company also has 6,000 shares of preferred stock at a market price of $38 and dividends 1.5 each par value 20 dollars  . The common stock is priced at $28 a share it is undervalued by $1.5 and there are 60000 shares outstanding, par value is 5 dollars  the stock is  pays $2.6 and will continue to grow at a rate of 0.07  . TAXES ARE 0.38 what is the cost of debt after tax? Answer for part 1 what is the cost of PS Answer for part 2 what is the cost of common stock? Answer for part 3 what is the weight of the bond according to book value method  Answer for part 4 what is the weight of the stock according to book value method  Answer for part 5 what is the weight of preferred stock according to book value method  Answer for part 6 what is the WACC? use the book value method

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
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The BEAR Company has 2000 bonds outstanding that have a market price of $1195 each and a face value of $1000. floatation cost is 0.015 the bond pays coupon of 0.055 quarterly  for  12  years. The company also has 6,000 shares of preferred stock at a market price of $38 and dividends 1.5 each par value 20 dollars  . The common stock is priced at $28 a share it is undervalued by $1.5 and there are 60000 shares outstanding, par value is 5 dollars  the stock is  pays $2.6 and will continue to grow at a rate of 0.07  . TAXES ARE 0.38 what is the cost of debt after tax? Answer for part 1 what is the cost of PS Answer for part 2 what is the cost of common stock? Answer for part 3 what is the weight of the bond according to book value method  Answer for part 4 what is the weight of the stock according to book value method  Answer for part 5 what is the weight of preferred stock according to book value method  Answer for part 6 what is the WACC? use the book value method
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