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  3. part a. a business is raising money for a new proj

Part a. a business is raising money for a new project. It is looking to...

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Finance

Part a. a business is raising money for a new project. It is looking to raise $48 million via bonds. The planned bond has an 8.8% semi-annual coupon, $1000 par value, and a 17-year to maturity. After the fee paid to the investment bank, the business will receive $975 for each bond.

What is the cost of debt for the new project? (10 points)

Part b. last year, the businesss earnings report posted $4.4 EPS and the business paid a $1.6 dividend for each share. The ROE is 12%. Assume the retention ratio would stay the same for the next few years. What is the growth rate for the businesss common stock?

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