he firm's marginal tax rate is 35%.  The firm's currently outstanding 10% annual coupon rate long-term debt sells at $1,051.11. The debt matures in 7 years. Coupon interest is paid semiannually. Skye's preferred stock pays a dividend of $3.30 per share, and its preferred stock sells for $30 per share.  Skye's earnings per share last year were $3.20.  The common stock sells for $55.00, last year’s dividend (D0) was $2.10, and a flotation cost (i.e, f ) of 10% would be required to sell new common stock.  Security analysts are projecting that the common dividend will grow at an annual rate of 9%.  The market risk premium is 5%, the risk-free rate is 6%, and Skye's beta is 1.516.        Question: Calculate the cost of common equity from retained earnings using the CAPM method (rs ). (Use excel format and show spreadsheet inputs

Granite Works maintains a debt-equity ratio of .65 and has a tax rate of 32%. The pretax cost of debt is 9.8%. There are 25,000 shares of stock outstanding with a beta of 1.2 and a market price of $19 a share. The current market risk premium is 8.5% and the current risk-free rate is 3.6%. This year, the firm paid an annual dividend of $1.10 a share and expects to increase that amount by 2% each year. Using an average expected cost of equity, what is the WACC?

The following information is available for Blue Ocean Group Ltd.:   Debt:  Outstanding corporate bond that pays annually 10% coupon rate with an annual before-tax yield to maturity of 12%. The bond issue has face value of $1,000 and will mature in 20 years.   Ordinary shares:  Outstanding ordinary shares which just paid a $8.50 dividend per share in the current financial year. The firm is maintaining 4% annual growth rate in dividends, which is expected to continue indefinitely.   Green Lagoon is the daughter company of the Blue Ocean Group and has the following capital structure:   50,000 ordinary shares outstanding at a market price of $36 a share. The shares have just paid a $5.84 annual dividend and have a dividend growth rate of 2.8%. 32,000 preference shares with a 8% fixed dividend, outstanding at a market price of $50 a share. The preference shares have a par value of $100. The outstanding bonds have a total face value of $4,500,000. The bonds have face value per bond of $1000…

Lugget Corp. has one bond issue outstanding with an annual coupon of 4%, a face value of $1,000 and a price of $1,179.65, which matures in 10 years. The company's tax rate is 25%. What is the company's after-tax cost of debt?