Business

FinanceQ&A LibraryHBM, Inc. has the following capital structure: Assets $400,000 Debt $140,000 Preferred stock 20,000 Common stock 240,000 The common stock is currently selling for $15 a share, pays a cash dividend of $0.75 pershare, and is growing annnually at 6%. the preferred stock pats a $9 cash dividend and currently sells for $91 a share. the debt pays interest of 8.5 percent annually, and the firm is the 30 percent marginal taxx bracket. a. What is the after tax cost of debt? b. what is the cost of preferred stock? c. what is the cost of common stock? d. what is the firm's weighted average cost of capital?Question

HBM, Inc. has the following capital structure:

Assets $400,000

Debt $140,000

Preferred stock 20,000

Common stock 240,000

The common stock is currently selling for $15 a share, pays a cash dividend of $0.75 pershare, and is growing annnually at 6%. the preferred stock pats a $9 cash dividend and currently sells for $91 a share. the debt pays interest of 8.5 percent annually, and the firm is the 30 percent marginal taxx bracket.

a. What is the after tax cost of debt?

b. what is the cost of preferred stock?

c. what is the cost of common stock?

d. what is the firm's weighted average cost of capital?

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