Description
Fin 534 Assignment Case Set 4 Week 10 Financial Management
Homework Set #4
Directions: Answer the following questions in a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link above.
- Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys, Inc. is currently selling for $20.00 a share. Bad Boys, Inc. expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. The Bad Boys, Inc. marginal tax rate is 35%. If Bad Boys, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys, Inc.’s cost of capital?
- If Bad Boys, Inc. raises capital using 30% debt, 5% preferred stock, and 65% common stock, what is Bad Boys, Inc.’s cost of capital?
Grading for this assignment will be based on answer quality, logic/organization of the paper, and language and writing skills, using the following rubric.

Explanation & Answer

Hello, kindly find the attached completed work. Thank You.
Running Head: COST OF CAPITAL
1
Cost of capital
Name
Institution of Affiliation
Date
COST OF CAPITAL
2
Bad Boys, Inc. Interpretation
Pre...

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