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Marginal Incorporated (MI) has determined that its after-tax cost of debt is 7.0%. Its cost of preferred stock is 11.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $250 million of debt, $55 million of preferred stock, and $195 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $64 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $212 million?
1) 10.95%
2) 12.12%
3) 11.54%
4) 11.25%
5) 10.08%
Prepare an amortization schedule for a five-year loan of $56,000. The interest rate is 7 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan?
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Assume that a bank has core capital of $1,000,000 and total capital of $2,000,000. Its total risk adjusted assets are $25,000,000 and total assets are $30,000,000. - does the bank have adequate capital?
National Electric Company (NEC) is considering a $45.19 million project in its power systems division. Tom Edison, the company’s chief financial officer, has evaluated the project and determined that the project’s unlevered cash flows will be $3.29 m..
Since their introduction, stock index futures contracts have become very popular and are now widely traded by finance professionals. What is the fourth primary factor involved in stock index futures contract pricing, and how does this factor affect s..
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Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity. Management plans to maintain debt at 25% of the company’s present value, and you believe that at this capital structure the company’s d..
The stock price of Baskett Co. is $54.10. Investors require a return of 15 percent on similar stocks. If the company plans to pay a dividend of $3.70 next year, what growth rate is expected for the company’s stock price?
A country barters the surplus coffee beans it grows for other agricultural products grown in a neighboring country. There is no exchange of currency between these countries. The type of business arrangement between the two countries can be regarded a..
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