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The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 3 percent less than that for preferred stock.
Debt can be issued at a yield of 11.0 percent, and the corporate tax rate is 20 percent. Preferred stock will be priced at $60 and pay a dividend of $6.40. The flotation cost on the preferred stock is $6.
a. Compute the after tax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. Compute the after tax cost of preferred stock. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
c. Based on the facts given above, is the treasurer correct?
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“Is it ethical for large firms to unilaterally lengthen their payables periods, particularly when dealing with smaller suppliers? Why or Why not?”
How would this change in the real exchange rate affect trade between the two countries and what actions on the part of Norden's central bank will be required to maintain an exchange rate in the target range?
Acme Inc. plans to issue 10-year, zero-coupon bonds to finance its capital expansion. Acme wants to raise $50 million for the expansion. If the required return on the bonds is 7.4%, how many bonds will the firm have to issue?
Upon graduating from college, you make an annual salary of $66,356. You set a goal to double it in the future. If your salary increases at an average annual rate of 8.13 percent, how long will it take to reach your goal?
The machinery required for a three year project costs $20,000, belongs in a 15% CCA class, and will require a net working capital investment of $5,000 up-front. The project generates after-tax operating income of $11,500.
The Wall Street Journal reports that the current rate on 5-year Treasury bonds is 2.45 percent and on 10-year Treasury bonds is 4.55 percent. Assume that the maturity risk premium is zero. Calculate the expected rate on a 5-year Treasury bond purchas..
Calculates a quarterly and annualized return on the portfolio, and the expected return for the portfolio (students may use the closing prices as of December 31st of last year).
What monthly car mortgage payments for the next 36 months are required to amortize a present loan of $3000 if interest is 12% compounded monthly?
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1. why are many governments in todays world liberalizing cross-border movements of goods services and resources?2.
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