Reference no: EM131621988
A) A Bad Boys Inc., is evaluating its cost of capital. Under consultation, Bad Boys, Inc., expects to issue new debt at par with a coupon rate of 8% and to isue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys, Inc., is currently selling for $20.00 per share. Bad Boys, Inc., expected to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. Bad Boys, Inc., marginal tax rate is 35%. If Bad Boys, Inc., raises capital using 45% debt, 5% preferred stock and 50% common stock, what is Bad Boys cost of capital?
B) If Bad Boys, Inc., raises capital using 30% debt, 5% preferred stock, and 65% common stock, and 65% common stock, what is Bad Boys cost of capital?
C) On page 457, your textbook details the term Cannibalization. In your own words, identify two corporations that have delt with cannibalization and what steps were taken to overcome the cannibalization?
The second year to be eligible for an incentive fee
: What rate of return must it earn in the second year to be eligible for an incentive fee?
|
What is the change in the price of bond based on duration
: If the interest rate increases by 1%(that is, from 5% to 6%), what is the change in the price of the bond based on duration?
|
What is the current market risk premium implied
: What is the current market risk premium implied by the following information about AT &T Company's bonds,
|
What is the price change due to the convexity
: Also if the interest rate increases from 4% to 5% what is the price change due to the convexity?
|
What is bad boys cost of capital
: If Bad Boys, Inc., raises capital using 30% debt, 5% preferred stock, and 65% common stock, and 65% common stock, what is Bad Boys cost of capital?
|
What is the cross-rate in terms of yen per pound
: What is the cross-rate in terms of yen per pound? What is the arbitrage profit per dollar used?
|
Firm net capital spending
: If the firm's net capital spending for 2015 was $980,000, and the firm reduced its net working capital investment by $88,000, firm's 2015 operating cash flow.
|
What is the maturity risk premium of the security
: Assume that the liquidity premium for the security is 0%. What is the maturity risk premium of the security?
|
What is beta of your portfolio
: Stock X has a beta of 1.16, stock Y has a beta of 1.47, and stock Z has a beta of 0.42. What is the beta of your portfolio?
|