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Question: Compute the cost of capital for the firm for the following:
a. A bond that has a 1,000 par value (face value) and a contract or coupon interest rate of 11.6 percent that is paid semiannually. The bond is currently selling for a price of $1,130 and will mature in 10 years. The firm's tax rate is 34 percent.
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 $14, and the firm's dividends per share have grown at a rate of 8.6 percent per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $27.25.
d. A preferred stock paying a 9.8 percent dividend on a $130 par value. The preferred shares are currently selling for $154.02.
e. A bond selling to yield 13.4 percent for the purchaser of the bond. The borrowing firm faces a tax rate of 34 percent.
Suppose the Robinson Company had a cost of goods sold of $1,000,000 in 2010 and $1,200,000 in 2011.
Assume a stock had an initial price of $84 each share, paid a dividend of $2.25 each share during year, and had an ending share price of $92. What was the dividend yield?
So if US Fed is intensifying intensify its raising of short term interest rates, does it mean the new interest rate is 0.75% + 2% = 2.75%. Therefore amount of interest per year is 10 mil USD x 2.75% ? and the risk im exposed to is foreign exhange r..
Two very long parallel plates of length 2L are separated a distance b. The upper plate moves downward at a constant rate V. A fluid fills the space between the plates. Fluid is squeezed out between the plates.
The M&M Company is financed by $4 million (market value) in debt and $6 million (market value) in equity. The cost of debt is 5% and the cost of equity is 10%. Calculate the weighted average cost of capital. (Assume no taxes.)
How would a more aggressive or a more conservative approach differ from the maturity matching approach, and how would each affect expected profits and risk? In general, is one approach better than the others?
Microtech Corporation is increasing rapidly and currently needs to retain all of its earnings, hence it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1 coming in three years from ..
Mark is saving for new furniture and saving $200 at the beginning of each month. He can save at an annual rate of 5% compounded monthly for the next two years. How much can he save? Can you also show how to put into financial calculator?
Good Values Inc. is all-equity-financed. The total market value of the firm currently is $200,000, and there are 5,000 shares outstanding.
Calculate the percentage of unoccupied space in a close-packed arrangement of identical spheres.
From your perspective, what aspects of the price of taking your friend to the airport has he omitted?
what is the expected return on an equally weighted portfolio of these three stocks?what is the variance of a portfolio
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