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What is the company cost of preferred stock

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1. Steve's Body Shop's bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%. If the current market price is $1,166, what is the yield to maturity?

2. Jim inherited three stocks from his father's stock portfolio and he's trying to find out the portfolio's beta. In stock A they invested $35,000 with a beta of 0.4. In stock B they invested $25,000 with a beta of 0.6. Finally, in stock C they invested $40,000 with a beta of 0.5. What is the portfolio's beta?

3. Blue's Tires can issue perpetual preferred stock at a price of $67 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock?

4. Bearded Butchers's currently outstanding bonds have an 8% coupon and a 10% yield to maturity. Bearded Butchers believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is its after tax cost of debt?

Reference no: EM132772125

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