At the end of its 2017 fiscal year-end X Corporation had 50,000 shares of preferred stock outstanding. The preferred stock has a book value of $30…

At the end of its 2017 fiscal year-end X Corporation had 50,000 shares of preferred stock

outstanding. The preferred stock has a book value of $30 per share. In addition, X paid

$75,000 in dividends to preferred shareholders in 2017. Xalso has $2,500,000 of interest

bearing debt outstanding and its after-tax cost of debt is 6.4%. The market value of X

Corporation’s common stock equity at year end is $6,240,000 and the company’s cost of common

equity is 9.4%.

Required:

a. What is the total book value of X Corporation’s preferred stock at the end of 2017?

b. Estimate the cost of X Corporation’s preferred equity capital.

c. Calculate X Corporation’s weighted average cost of capital.

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