Chapter 9 Assignment – BUSI 5423
Inputs needed:
Yield – 11%
Po = $60
Tax rate = 40%
rRF = 4%
Dpf = $5.00
b = 0.7
Pps = $100
RPm = 7%
F for preferred = 3%
Do = $3.40
F for common = 3.5%
g = 3%
Capital structure from debt = 25%
Capital structure from pfd. stock = 15%
Capital structure from com. Stock = 60%
1.
What is the aftertax cost of debt?
2.
What is
the cost of preferred stock?
3.
What is
the cost of common stock using the CAPM?
4.
What is the cost of common equity using the DCF
method?
5.
Now what
is the WACC (use information that includes 1-3)?
