Given the following data tax rate of 35bonds 12 semiannual, Ask an Expert

Finance

Given the following data: Tax rate of 35%

Bonds: 12% semiannual coupon with 15 year maturity. Current price is $1153.72, and no flotation cost.

Preferred Stock: $100 par value with a 10% quarterly dividend. Its current price is $113.10.

Common Stock: Current price is $45.00 per share. Do= $4.20, excepted dividend growth is 6%, Beta= 1.2.

T-Bond Yield (rRF)=6%, Market Risk Premium (rM-rRF)=9%, risk premium=4%

Retain Earnings for next year= $300,000

Floatation cost for new common stock=6.5%

Capital Structure: Debt= 25% ; Preferred Stock= 10% ; Common Stock= 65%

a. What is the interest rate on the firms debt(rd) and what is the after tax cost of debt?

b. What is the firms cost of preferred stock (rp)?

c. What is the firms cost of retained earnings using the CAPM, DCF, and Bond-Yield-Plus-a-Risk-Premium approaches? What is your final eatimate of rs?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9868669

Have any Question?Write your Review or question?

Related Questions in Basic Finance

One of your customers has just made a purchase in the

One of your customers has just made a purchase in the amount of $19,200. You have agreed to payments of $335 per month and will charge a monthly interest rate of 1.11 percent. How many months will it take for the account ...

1 there are three investments you are consideringinvestment

1. There are three investments you are considering: Investment 1: A saving account with an interest rate of 6% compounded daily. Investment 2: An investment fund guarantees it will pay 6.15% compounded annually. Investme ...

An insurance company is selling a perpetuity contract that

An insurance company is selling a perpetuity contract that pays $2,00 monthly. The contract currently sells for $100,000. (a) What is the monthly return on this investment vehicle? (b) if instead the amount of monthly in ...

Consider a currency swap for 10 million and sf 15 million

Consider a currency swap for $10 million and SF 15 million. One party pays dollars at a fixed rate of 9%, and the other pays Swiss francs at a fixed rate of 8 percent. The payments are made semiannually based on the exac ...

Your company is considering a new project that will require

Your Company is considering a new project that will require $18,000 of new equipment at the start of the project. The equipment will have a depreciable life of 5 years and will be depreciated to a book value of $3,000 us ...

How you will adjust your small business cash budget to

How you will adjust your small business cash budget to manage contingencies (such as emergencies and market shifts) as well as product and distribution shifts?

Are us executives paid too much particularly compared to

Are U.S. Executives paid too much particularly compared to the average worker in their organization?

Assignment -background - youre a group of investment

Assignment - BACKGROUND - You're a group of investment analysts who work for a large investment consulting firm based in Australia. There's one big institutional investor from overseas that is interested in investing in ...

Questions -q1 techno stock was 25 per share at the end of

Questions - Q1: TechNo stock was $25 per share at the end of last year. Since then, it paid a $1.50 per share dividend last year. The stock price is currently $23. If you owned 300 shares of TechNo, what was your percent ...

Discuss hsbc ring-fencing strategy and the setting up of

Discuss HSBC ring-fencing strategy and the setting up of HSBC UK?

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

Recent Questions

Ask Basic Finance Expert