Jenny Fabrics and Clothing

QUESTION

1. Over the relevant ranges noted in the following table, calculate the after-tax costs ofeach source of financing needed to complete the table:Source of capital Range of new financing After-tax costs (%)Long-term debt $ 0 700,000$ 700,000 and abovePreferred stock $ 0 and above ..Common stock equity $ 0 1,300,000$1,300,000 and above
long term $0-700,000 ________ 700,000 preferred stock $0- and above _______ common stock $0-$1,300,000 ________ $1,300,000 Cost of each source is calculated using cost of capital formulae. For longterm debt : After tax cost of debt = Interest(1- tax rate) For Preferred stock: Cost of Preference Stock = Interest/preference dividend

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