FIN 300 Quiz 5 - FIN 300 Quiz 5 Cost of Capital Builtrite...

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FIN 300 Quiz 5 Cost of CapitalBuiltrite Auto has preferred stock shares outstanding that pay an annual dividend of $8 and arecurrently selling for $86 a share.What is the after-tax cost of preferred stock if the flotation costfor new shares is 5% and Builtrite is in the 34% marginal tax bracket?
Builtrite Furniture is considering selling bonds for a plant expansion.Currently, Builtrite believesthat it could sell 15 year maturity, $1000 par value, 5 3/4% coupon bonds after flotation costs for$985. If Builtrite is in the 34% marginal tax bracket, what is the after-tax cost for the bonds?
Builtrite’s common stock is currently selling for $56 a share and the firm just paid an annual
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Term
Fall
Professor
Olander
Tags
Corporate Finance, Cost Of Capital, Quiz 5, marginal tax

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