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Given the following information, calculate the weighted average cost for the Ban Corp.
Percent of capital structure:
Preferred stock 10%
Common equity 70%
Debt 20%
Additional information:
Corporate tax rate 34%
Dividend, preferred $8.00
Dividend, expected common $4.00
Price, preferred $80.00
Growth rate 5%
Bond yield 7%
Price, common $80.00
A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pre-tax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pre-tax return. The after t..
A triple A rated company borrows $100 millions interest only loan for a 10 year period at fixed rate of 5.5 percent. Assuming the company is in the 35 percent tax bracket. What will be the present value of the tax shield over the ten year period assu..
Gilligan Co.'s bonds currently sell for $1,150. They have a 6.75% annual coupon rate and a 15-year maturity, and are callable in 6 years at $1,067.50. Assume that no costs other than the call premium would be incurred to call and refund the bonds, an..
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If behavioral finance holds, this implies:
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the first step in an external analysis is to determine the industry to which your target business is classified.
A firm has 500,000 shares of stock outstanding with a par value of $1 per share and debt outstanding with a par value of $1,000,000. The stock is selling for $10 per share, and the debt is selling at a discount (90% of par). If the firm were financed..
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