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>A corporation has 9,000 bonds outstanding with a 5% annual coupon rate, 7 years to maturity, a…

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  • >A corporation has 9,000 bonds outstanding with a 5% annual coupon rate, 7 years to maturity, a $1,000 face value, and a $1,200 market price.
  • >The company’s 110,000 shares of preferred stock pay a $4 annual dividend, and sell for $40 per share.
  • >The company’s 500,000 shares of common stock sell for $25 per share and have a beta of 1. The risk free rate is 5%, and the market return is 11%. Tax rate is 20 %.
  1. Calculate cost of preferred stock. Briefly show your steps.
  2. Calculate cost of equity. Briefly show your steps.
  3. Calculate cost of debt.Briefly show your steps.
  4. What are the weights of debt, preferred stock and equity? Briefly show your steps.
  5. What is WACC? Briefly show your steps.

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