The Allied Group intends to expand the company’s operation

The Allied Group intends to expand the company’s operation. The Allied Group intends to expand the company’s operationThe Allied Group intends to expand the company’s operation by making significant investments in several opportunities available to the group. Accordingly, the group has identified a need for additional financing in preferred and new common stock and new bond issues. The risk free rate for the company is 7% and the appropriate tax rate is 40%.ÿ Also, The beta coefficientÿ for the company is 1.3 and the market risk premiumÿ (Km) is 12.New DebtThe company has been advised that new bonds can be sold on the marketÿat par ($1000) with an annual coupon of 8%, for 30 years.New Common StockÿMarket analysis has determined that given the positive history of the firm,new common stock can be sold at $29 per share, with the last dividend beingpaid of $2.25 per share. The growth rate on any new common stock hasbeen estimated at a constant rate of 15% per year for the next 3 years.Preferred StockÿNew Preferred Stock can be issued with an annual dividend of 10% of parand is paid annually and currently would sell for $90 per share.Questions: Address all of the following questions in a brief but thorough manner.úÿÿÿÿÿÿÿÿ What is the after tax cost of new common stock, assuming constant growth in each of the next 3 years?úÿÿÿÿÿÿÿÿ What would the dividend yield in each of the first three years if the growth rate is 12%?úÿÿÿÿÿÿÿÿ What is the after tax component cost of new debt today?The Allied Group intends to expand the company’s operation by making significant investments in several opportunities available to the group. Accordingly, the group has identified a need for additional financing in preferred and new common stock and new bond issues. The risk free rate for the company is 7% and the appropriate tax rate is 40%.ÿ Also, The beta coefficientÿ for the company is 1.3 and the market risk premiumÿ (Km) is 12.New DebtThe company has been advised that new bonds can be sold on the marketÿat par ($1000) with an annual coupon of 8%, for 30 years.New Common StockÿMarket analysis has determined that given the positive history of the firm,ÿnew common stock can be sold at $29 per share, with the last dividend beingÿpaid of $2.25 per share. The growth rate on any new common stock hasÿbeen estimated at a constant rate of 15% per year for the next 3 years.Preferred StockÿNew Preferred Stock can be issued with an annual dividend of 10% of parÿand is paid annually and currently would sell for $90 per share.Questions: Address all of the following questions in a brief but thorough manner.úÿÿÿÿÿÿÿÿ What is the after tax cost of new common stock, assuming constant growth in each of the next 3 years?úÿÿÿÿÿÿÿÿ What would the dividend yield in each of the first three years if the growth rate is 12%?úÿÿÿÿÿÿÿÿ What is the after tax component cost of new debt today?

The Allied Group intends to expand the company’s operation