Ask Question, Ask an Expert


Ask Basic Finance Expert

Fair and Equitable has to determine its cost of capital using the following information:

The firm has $30,000,000 in corporate bonds currently selling at 97.5. The bonds mature in 9 years and have an annual coupon rate of 6.6% paid semiannually. F&E faces a 35% tax rate. This firm has 1,500,000 shares of preferred stock that pays a dividend of $0.80 per year and currently sells for $9.00 per share.

Common stock selling for $3.45 per share has just paid a dividend of $0.29 and is expected to grow by 4% forever. The firm has a beta of 1.3 and the risk free rate on treasury securities is 3%. The average return on the S&P500 is 10.54%.

find out the cost of capital for the firm. Fair and Equitable has 20 million common shares outstanding.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939829

Have any Question? 

Related Questions in Basic Finance

Finance discussion questioneactivity-bulluse the internet

Finance Discussion Question eActivity- • Use the Internet to research the economic activity of Brazil and Switzerland. Be prepared to discuss. • From the e-Activity, determine key reasons why a multinational corporation ...

Assignment financial managementdirections be sure to save

ASSIGNMENT: Financial Management Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to u ...

Finance assignmentpart 1problem 1find the following values

Finance Assignment Part 1 PROBLEM 1 Find the following values for a lump sum: - The future value of $500 invested at 8 percent for one year - The future value of $500 invested at 8 percent for five years - The present va ...

1 suppose you have a 1000 face value bond with 12 years to

1. Suppose you have a $1,000 face value bond with 12 years to maturity, a coupon rate of 6% and a yield to maturity of 8%. If the bond makes semiannual payments, what is its price today? 2. Compute the value of Acme Comm ...

In the wake of the financial crisis of 2007-2009 would you

In the wake of the financial crisis of 2007-2009, would you anticipate the bank lending channel becoming more or less important in the United States in the near future? Explain your answer.

You have 50000 to start an education fund for your child

You have $50,000 to start an education fund for your child. You are expecting him/her to attend college 18 years from now. According to statistics, the expected amount you will need 18 years later should be $300,000. Wha ...

The past five monthly returns for kohls are 386 percent 442

The past five monthly returns for Kohl's are 3.86 percent, 4.42 percent, -2.00 percent, 9.41 percent, and -2.88 percent. Compute the standard deviation of Kohls' monthly returns. (Do not round intermediate calculations a ...

Amortization project due september 20 2015 finance 510 -

Amortization Project (Due September 20, 2015) Finance 510 - Davenport University Objective: The assignment will help you to understand how changes in loan terms and payments will affect the total amount you pay. 1. Creat ...

Finance assignment- part 1 group written assignmenttask

Finance Assignment- Part 1: Group Written Assignment Task Description - As part of this assessment you are required to conduct your own research of market and financial data online. 1. Evidence of Group Work Please see t ...

Given a 10 percent interest rate compute the year 9 future

Given a 10 percent interest rate, compute the year 9 future value if deposits of $10,000 and $20,000 are made in years 1 and 5 respectively, and a withdrawal of $5,000 is made in year 7.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate