Estimate the required rate of return of the common stock

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Reference no: EM132059673

You work for a firm with an issue of 40,000 bonds outstanding and 5,000,000 of market value in preferred stock that sells to yield 6%. What is the value of the preferred stock if it pays a $5 dividend?

The common stock has a market value of $50 per share with 100,000,000 shares outstanding. If the growth rate is 6% per annum and the earnings are $ 4 per share. What is the required rate of return of the common stock?

Problem : Assume capital structure as above. What is the total market value of the firm if the bonds sell for $975 each?

Please show all work.

Reference no: EM132059673

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