Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Hightop’s CFO is considering whether to take on the new project which has average risk. He gathered the information given below:

i) The company has bonds outstanding that mature in 26 years with the annual coupon of 7.5 percent. The bonds contain the face value of $1,000 and sell in market today for $920. There are 10,000 bonds outstanding.

ii) The risk-free rate is 6%.

iii) The market risk premium is 5%.

iv) The stock’s beta is 1.2.

v) The company’s tax rate is 40%.

vi) The company has 50,000 shares of preferred stock with the par value of $100. These shares are presently trading at $105 and pay the annual dividend of $5.40.
vii) The company also has 1,850,000 common shares trading at $25. These shares last paid the annual dividend of $0.93.

1) What is Hightop’s after-tax cost of debt?

2) What is Hightop’s cost of preferred equity?

3) What is Hightop’s Wd?

Requirements
Min Pages: 1

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914319

Have any Question? 


Related Questions in Basic Finance

The ok railroad needs to raise 95 million for capital

the O.K. Railroad needs to raise $9.5 million for capital improvements. One possibility is a new preferred stock issue - 8 percent dividend, $100 par value - stock that would yield 9 percent to investors. Flotation costs ...

Use the attached document reply format to answer the

Use the attached document (Reply Format) to answer the information below: Brief Description: McDonald's is the world's leading global food service retailer with over 36,000 locations in over 100 countries. More than 80% ...

The text discusses the trade-off between internal and

The text discusses the trade-off between internal and external validity, known as the experimenters dilemma. Speculate on things a researcher can do to increase internal and external validity simultaneously, thereby desi ...

1 discuss the advantages and disadvantages of single-case

1. Discuss the advantages and disadvantages of single-case experimental designs, relative to group designs. 2. What is a case study? Are case studies an example of descriptive, correlational, experimental, or quasi-exper ...

Perform the following test to determine the effectiveness

Perform the following test to determine the effectiveness of random assignment to conditions. Use random assignment to divide your class into two halves. Then calculate the mean of the two halves on (a) the following thr ...

Empirical studies have established that the betas of

Empirical studies have established that the betas of conglomerate firms have been significantly above 1. What does this imply about diversification as a strong motive for conglomerate mergers? Over a long period of time ...

Phillips rock and mud is trying to determine the maximum

Phillips Rock and Mud is trying to determine the maximum amount of cash dividends it can pay this year. Assume its balance sheet is as follows: Assets Cash $ 386,000 Accounts receivable 836,000 Fixed assets   1,048,000   ...

What is the difference between basic earnings per share and

What is the difference between basic earnings per share and diluted earnings per share? If an asset is depreciated for tax purposes using MACRS, but depreciated using straight-line depreciation for financial reporting pu ...

Assignment pricing decisionsthis assignment will assess

Assignment: Pricing Decisions This assignment will assess competency 4. Develop a professional sales training and motivation program for an organization. Directions View the Chapter 19 - Pricing Concepts video. http://ww ...

Maxines pumps or mp sells bilge pumps for 355 each each

Maxine's Pumps or MP sells bilge pumps for $355 each. Each pump costss $255 to produce, and MP's fixed operating costs equal $700,000. What is MP's operating income (NOI) when 10,000 pumps are sold?

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen