Homework answers / question archive / A firm is 30% debt and 70% equity

A firm is 30% debt and 70% equity

Finance

Share With

A firm is 30% debt and 70% equity.  The firm's tax rate is 40%.  Their bonds trade for $990, mature in five years, and have a coupon rate of 8% paid annually.  The firm's common stock trades at $15 per share and just paid a dividend of $3per share.  The dividends are expected to grow at a rate of 3% per year forever.

The bond's yield is ____ % 

The required rate of return for the company's common stock is ____ %.

The cost of financing for this firm (WACC) is_____ %.