Use the following data for the Sara Company to calculate the cost of common stocks (Rs), the cost of Preferred stocks (Rps), and the cost of Debt: (Rd)? ItemSymbolValueRisk Free RateRf7%Stock RiskB1.5Market ReturnRm25%Interest Rate for DebtRd (B.T)9%TAX rateT5%Preferred Stock DividendD(ps)10Preferred Stock PriceP(ps)100floatation cost psFC$4 The cost of Preferred stocks: (Rps)? The cost of Debt: (Rd)?

The cost of Preferred stocks = (Dividend + Floatation cost) / Price of Preferred stock The cost of…

Answered: Use the following data for the Sara…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section9.8: The Weighted Average Cost Of Capital (wacc)

Problem 3ST

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Use the following data for the Sara Company to calculate the cost of common stocks (Rs), the cost of Preferred stocks (Rps), and the cost of Debt: (Rd)?

Item	Symbol	Value
Risk Free Rate	Rf	7%
Stock Risk	B	1.5
Market Return	Rm	25%
Interest Rate for Debt	Rd (B.T)	9%
TAX rate	T	5%
Preferred Stock Dividend	D(ps)	10
Preferred Stock Price	P(ps)	100
floatation cost ps	FC	$4

The cost of Preferred stocks: (Rps)?

The cost of Debt: (Rd)?

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