(Solved): (Individual or component costs of capital) Compute the cost of the following: a. A bond that has \( ...

(Individual or component costs of capital) Compute the cost of the following: a. A bond that has \( \$ 1,000 \) par value (face value) and a contract or coupon interest rate of 7 percent. A new issue would have a floatation cost of 9 percent of the \( \$ 1,115 \) market value. The bonds mature in 6 years. The firm's average tax rate is 30 percent and its marginal tax rate is 22 percent. b. A new common stock issue that paid a \( \$ 1.60 \) dividend last year. The par value of the stock is \( \$ 15 \), and earnings per share have grown at a rate of 11 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant dividend-earnings ratio of 30 percent. The price of this stock is now \( \$ 24 \), but 6 percent flotation costs are anticipated. c. Internal common equity when the current market price of the common stock is \( \$ 46 \). The expected dividend this coming year should be \( \$ 3.00 \), increasing