Issue perpetual preferred stock

Assignment Help Financial Management
Reference no: EM131354497

Cost of Preferred Stock

Torch Industries can issue perpetual preferred stock at a price of $67.50 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

%

Reference no: EM131354497

Questions Cloud

Well-diversified portfolio of high-quality-large-cap stocks : Nick Fitzgerald holds a well-diversified portfolio of high-quality, large-cap stocks. The current value of Fitzgeralds portfolio is $735,000, but he is concerned that the market is heading for a big fall (perhaps as much as 20%) over the next three t..
What is holmes after-tax cost of debt : The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Holmes's after-tax..
What is the risk neutral probability of an up movement : A binomial tree with three-month time steps is used to value a currency option. The domestic and foreign risk-free rates are 2% and 4% respectively. The volatility of the exchange rate is 20%. What is the risk neutral probability of an up movement? W..
Issue perpetual preferred stock : Torch Industries can issue perpetual preferred stock at a price of $67.50 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, rp?
Valuation of constant growth stock : A stock is expected to pay a dividend of $1.75 at the end of the year (i.e., D1 = $1.75), and it should continue to grow at a constant rate of 10% a year. If its required return is 15%, what is the stock's expected price 4 years from today? Round you..
Use for debt when calculating cost of capital : Liu Industrial Machines issued 152,000 zero coupon bonds five years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.2 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.3 ..
About how to make the product more competitive : Bat's product manager is under pressure to increase market share, but is uncertain about how to make the product more competitive. The product is reasonably well-positioned in the Thrift segment and enjoys relatively high awareness and accessibility...
What is the standard deviation of returns for this fund : You believe that there is a 15% probability of a recession and 85% probability of a normal economy. If a fund is expected to earn -12% in a recession and 15% in a normal year, what is the standard deviation of returns for this fund? Banking instituti..

Reviews

Write a Review

Financial Management Questions & Answers

  Deposit at beginning of year and interest earned during year

Year Account balance, beginning of year" "Deposit at beginning of year" "Interest earned during year" "Total in account, end year"

  What is the total opportunity cost for a month based

The Timberline firm expects a total cash need of 12, 500 over the next 3 month. They have a beginning cash balance of 1,500, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is 3.50. What is t..

  What is the present value of the perpetuity

What is present value of perpetuity of $100 per year with first payment started 5 years from today if appropriate discount rate is 5%? If discount rate is increased to 15% what is the present value of the perpetuity?

  What amount of cash will be received during december

The sales for October, November and December are $10,000, $12,000 and $18,000, respectively. For any particular month of sales, the following percentages are received over time in cash: 20% in cash from that same month of sales; 50% in cash from the ..

  Find the market return for an asset with a required return

Find the required return for an asset with a beta of 0.90  when the? risk-free rate and market return are 8% and 12% respectivley. Find the ?risk-free rate for a firm with a required return of 15.000% and a beta of 1.25 when the market return is 14%...

  Cost to corporation of each type of capital is dependent

The cost to a corporation of each type of capital is dependent upon:

  Compute the price paid by investors for the paper

Student Pleasers, Inc. issues $5 million (face value) in commercial paper, at a discount yield of 7.8%. The maturity is 270 days. Compute the price paid by investors for the paper. (solve to the nearest dollar). After computing the price, compute the..

  Component cost of preferred stock

ILK has preferred stock selling for 96 percent of par that pays a 5 percent annual coupon. What would be ILK’s component cost of preferred stock?

  Calculate the expected net cash flows for year 3

Hayward Enterprises, a successful imaging products firm, is considering expanding into the lucrative laser-engraved self-portrait business- Calculate the expected net cash flows for year 3.

  What are the parameters that the value of an option depends

What are the parameters that the value of an option depends upon and how would a rise in each of these parameters affect the price of a put and call?

  Evaluated when trying to determine if customer will pay

There are generally considered to be five key factors that should be evaluated when trying to determine if a customer will pay. Write seven questions that a credit manager should answer when reviewing a credit application that would address these fac..

  Concerned about your retirement

You are 21 years old and are concerned about your retirement. You want to live comfortably when you retire 49 years from now. Since you won’t have a house payment (you expect to have the mortgage paid off by then), you figure you will need only $4,00..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd