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HBM, Inc. has the following capital structure: Assets $400,000 Debt $140,000 Preferred Stock $20,000 Common...

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HBM, Inc. has the following capital structure: Assets $400,000 Debt $140,000 Preferred Stock $20,000 Common Stock $240,000 The common stock of the company has a B of 1.5 and the expected market risk premium is 6%. The rate on long-term Treasury bonds is 2%. The debt will mature in 30 years and is traded at 100% of the par value. It has a coupon rate of 8.5% and the coupons are paid twice a year. The preferred stock pays a dividend of $10 per share and is traded at $100. The firm is paying 25% effective tax rate. 1. What is the after-tax cost of debt? 2. What is the cost of common stock? 3. What is the cost of preferred stock? 4. What is the firm's weighted average cost of capital? Your Answer: What is the after-tax cost of debt? What is the cost of common stock? Cost of common stock is determined by the CAPM model: . What is the cost of preferred stock? Cost of preferred stock is determined by the payment and price: . What is the firm's weighted average cost of capital

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