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Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following:
a. A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 11.7% that is paid semiannually. The bond is currently selling for a price of $1122 and will mature in 10years. The firm's tax rate is 34%.
b. If the firm's bonds are not frequently traded, how would you go about determining a cost of debt for this company?
c. A new common stock issue that paid a $1.76 dividend last year. The par value of the stock is $15, and the firm's dividends per share have grown at a rate of 8.3% per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $27.97.
d. A preferred stock paying a 9.8% dividend on a $124 par value. The preferred shares are currently selling for $ 154.62.
e. A bond selling to yield 13.4% for the purchaser of the bond. The borrowing firm faces a tax rate of 34%.
You and the vice president of accounting are meeting in preparation for the meeting with the CFO. Provide examples for and discuss the following topics:
Requires disclosure of the finance charge and the annual percentage rate of credit along with certain other costs and terms to permit consumers to compare the prices of credit from differing sources.
What is the standard deviation of a two-asset portfolio if one of the assets has a standard deviation of 0.30, the other asset has a standard deviation of 0.15, and the correlation coefficient between the two assets is 0.15 if ten percent of the p..
Compute the weighted cost of capital that is appropriate to use in evaluating this expansion program
XYC Company is issuing preferred stock yielding at 10 percent, and ABC Corp. is planning buying the stock. XYZ's tax rate is 20 percent and ABC's tax rate is 34%.
Haynes estimates the variance as .006 based on the variability of past price movements. What is the value of this put option?
An interest expense of $11,000 will be incurred annually. The project has a life of 3 years. At the end of the three years, the equipment has an estimated market value of $26,000. The company requires a 14% rate of return and is in the 34% margina..
Calculate the current market value and OCC of the portfolio consisting of the assetsin parts a, b and c.
an 8 percent semi-annual coupon bond matures in 5 years. the bond has a face value of 1000 and a current yield of 8.21
On Oct. 5th, Reem purchased 2500 shares of Mediterranean Co. stocks at €35 per share and 1500 shares of KFD at €28 per share. According to financial analysts' report, in the coming three months Mediterranean and KFD stock prices may decline.
Explain whether or not it would be financially beneficial for the investor to refinance, if the plan is to own the property for the remaining loan term.
polycorp wishes to make a three for one stock split each share will be replaced by three shares. the current share
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