a. A bond that has ​$1 comma 000 par value​ (face value) and acontract or coupon interest rate of 6 percent. A new issue wouldhave a floatation cost of 8 percent of the ​$1 comma 150 marketvalue. The bonds mature in 13 years. The​ firm's average tax rateis 30 percent and its marginal tax rate is 33 percent.
b. A new common stock issue that paid a ​$1.80 dividend last year.The par value of the stock is​ $15, and earnings per share havegrown at a rate of 11 percent per year. This growth rate isexpected to continue into the foreseeable future. The companymaintains a constant​ dividend-earnings ratio of 30 percent. Theprice of this stock is now ​$29​, but 7 percent flotation costs areanticipated.
c. Internal common equity when the current market price of thecommon stock is ​$45. The expected dividend this coming year shouldbe ​$3.20​, increasing thereafter at an annual growth rate of 7percent. The​ corporation's tax rate is 33 percent.
d. A preferred stock paying a dividend of 9 percent on a ​$120 parvalue. If a new issue is​ offered, flotation costs will be 12percent of the current price of ​$179.
e. A bond selling to yield 13 percent after flotation​ costs, butbefore adjusting for the marginal corporate tax rate of 33 percent.In other​ words, 13 percent is the rate that equates the netproceeds from the bond with the present value of the future cashflows​ (principal and​ interest).
a. What is the​ firm's after-tax cost of debt on the​ bond?
b. What is the cost of external common​ equity?
c. What is the cost of internal common​ equity?
d. What is the cost of capital for the preferred​ stock?
e. What is the​ after-tax cost of debt on the​ bond?