Kinston sports supplies is considering an average risk project that will cost $300,000 at time zero and is expected to...
Kinston sports supplies is considering an average risk project that will cost $300,000 at time zero and is expected to generate annual after tax cash inflows of 52,000 at the end of each of the next 10 years. The firm has 15,000 shares of common stock outstanding at a price of $40 a share, 2,000 shares of preference stock outstanding at a price of $90 a share, and 50 bonds outstanding at a price of 105.53 percent of par. The company's 7.5% prefer stock has a par value of $100 each. It's currently outstanding bonds have a face value of $1,000, carry an annual coupon rate of 10% and will mature in 8 years. Kinston's most recently paid dividends are $2 a share and the expected growth in dividends is 10% per year indefinitely. The applicable tax rate for kinston is 34%
1. What is kinston's pre-tax cost of debt?
2. What is kinston's cost of preferred stock?
3. What is kinston's cost of equity
4. What is kinston's capital structure weight of the preferred stock?
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