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Fast Cash Limited has the following information and a tax rate of 30 percent. . Debt 700, 8 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 95 percent of par, the bonds make semi-annual payments Common stock 350,000 shares outstanding, selling for $60 per share; the beta is 1.05 Preferred stock 8,000 shares of 6 percent preferred stock outstanding, currently selling for $115 per share Market 7 percent market risk premium and 4 percent risk-free rate Determine the company’s WACC by computing the follow:
1. Total Market value for the company.
2. After-tax Cost of Debt
3. Cost of Common Stock
4. Cost of Preferred Stock
5. WACC
Twice Shy Industries has a debt−equity ratio of 1.4. Its WACC is 9.4 percent, and its cost of debt is 6.7 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital? What is the company’s unlevered cost of equity capi..
You are planning to save for retirement over the next 25 years. To do this, you will invest $700 a month in a stock account and $300 a month in a bond account. The return of the stock account is expected to be 9 percent, and the bond account will pay..
The formula Do(1+g)/{P(1-f)} + g can be used to estimate the required return to the issuing company on which security?
Acme Corporation just paid a dividend of D 1 = $1.72. Analysts expect the company's dividend to grow by 10% between year 1 and 2, and at a constant rate of 5% from year 2 to 3 and continue with the 5% thereafter. The required return on this low-risk ..
Lacewell Inc. recently paid a dividend of $2.00 per share. The company's dividends are expected to grow at a constant rate of 6% and the stock's required return is 13%. What is the value of Lacewell Inc.'s common stock?
A convertible bond has a 6.5 percent coupon, paid semiannually, and will mature in 10 years. If the bond were not convertible, it would be priced to yield 5.5 percent. The conversion ratio on the bond is 25 and the stock is currently selling for $51 ..
The payback method fails to consider. Why is our reserve banking system an independent federal agency? Why do many people believe we should not have a independent reserve system? Corporate federal income tax rates. Preferred stock and bonds are simil..
What influence would negative interest rates have on bank depositors? Is there a Christian Worldview for such a monetary policy whereby depositors are paid a minuscule savings rate, or even charged a fee on their saving account?
Please research Negative interest rate (NIRP) or Zero interest rate (ZIRP) policies and explain the following; How does this affect the bond market? Who wins and who loses in this environment?
Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.13 and 0.19, respective..
You buy 500 shares of stock at a price of $ 38.00 and an initial margin of 60 percent. If the maintenance margin is 30 percent, at what price will you receive a margin call?
Compute the future value of a $240,000 home purchased today which increases in value by 3.5% annually for 10 years. Compute the monthly mortgage payment for a $200,000 mortgage loan for 30 years with a contract rate of 3.75%.
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