Peter’s Audio Shop has a cost of debt of 7 percent, a cost of equity of 11 percent, and a cost of preferred stock of 8 percent. The firm has 104,000 shares of common stock outstanding at a market price of RM 20 a share. There are 40,000 shares of preferred stock outstanding at a market price of RM 34 a share. The bond issue has a total face value of RM 500,000 and sells at 102 percent of face value. The tax rate is 34 percent. What is the weighted average cost of capital for Peter’s Audio Shop? * A coupon bond that pays interest of RM 100 annually has a par value of RM 1,000, matures in 5 years, and is selling today at a RM 72 discount from par value. The yield to maturity (kb) on this bond is *

Peter’s Audio Shop has a cost of debt of 7 percent, a cost of equity of 11 percent, and a cost of preferred stock of 8 percent. The firm has 104,000 shares of common stock outstanding at a market price of RM 20 a share. There are 40,000 shares of preferred stock outstanding at a market price of RM 34 a share. The bond issue has a total face value of RM 500,000 and sells at 102 percent of face value. The tax rate is 34 percent. What is the weighted average cost of capital for Peter’s Audio Shop? * A coupon bond that pays interest of RM 100 annually has a par value of RM 1,000, matures in 5 years, and is selling today at a RM 72 discount from par value. The yield to maturity (kb) on this bond is *

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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