question archive *Debt: 6,000 of 8 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 108 percent of par; the bonds make annual payments
*Debt: 6,000 of 8 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 108 percent of par; the bonds make annual payments
Subject:FinancePrice: Bought3
*Debt: 6,000 of 8 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 108 percent of par; the bonds make annual payments.
*Preferred stock: 8000 shares of 7.2% preferred stock dividend rate, selling at $90 per share.
*Common stock: 500,000 shares outstanding, selling for $70 per share; the beta is 1.12.
*Market data: 10 percent market rate of return and 5 percent risk-free rate, and the corporate tax rate of 30%.
What is the cost of common stock?
Group of answer choices
a. 10.6%
b. 8.2%
c. 10%
d. 7.2%
