what is the cost of debt after tax? what is the cost of PS what is the cost of common stock?

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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The JIRAF Company has 1700 bonds outstanding that have a market price of $1200 each and a face value of
$1000. floatation cost is 0.015 the bond pays coupon of 0.055 quarterly for 11 years. The company also has 6,00
shares of preferred stock at a market price of $40 and dividends 1.5 each par value 20 dollars. The common
stock is priced at $29 a share it is undervalued by $1.5 and there are 70000 shares outstanding, par value is 5
dollars the stock paid this year $1.1 and will continue to grow at a rate of 0.035
TAXES ARE 0.25
what is the cost of debt after tax?
what is the cost of PS
what is the cost of common stock?
what is the weight of the bond according to book value method
what is the weight of the stock according to book value method
what is the weight of preferred stock according to book value method
what is the weight of preferred stock according to book value method
Transcribed Image Text:The JIRAF Company has 1700 bonds outstanding that have a market price of $1200 each and a face value of $1000. floatation cost is 0.015 the bond pays coupon of 0.055 quarterly for 11 years. The company also has 6,00 shares of preferred stock at a market price of $40 and dividends 1.5 each par value 20 dollars. The common stock is priced at $29 a share it is undervalued by $1.5 and there are 70000 shares outstanding, par value is 5 dollars the stock paid this year $1.1 and will continue to grow at a rate of 0.035 TAXES ARE 0.25 what is the cost of debt after tax? what is the cost of PS what is the cost of common stock? what is the weight of the bond according to book value method what is the weight of the stock according to book value method what is the weight of preferred stock according to book value method what is the weight of preferred stock according to book value method
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