After Tax Cost Of Debt Cost Of Preferred Stock 542253

HBM, Inc. has the following capital structure:

Assets 400,000 Debt $140,000

Preferred stock $20,000

Common stock $240,000

The common stock is currently selling for $15 a share, pays a cash dividend of $0.75 per share, and is growing annually at 6%. The preferred stock pays a $9 cash dividend and currently sells for $91 a share. The debt pays interest of 8.5% annually, and the firm is in the 30% marginal tax bracket.

a. What is the after-tax cost of debt?

b. What is the cost of preferred stock?

c. What is the cost of common stock?

What is the firms weighted-average cost of capital