What is the firm pretax cost of debt-cost of preferred stock

Assignment Help Financial Management

Reference no: EM132046067

1. The expected return on the market portfolio is 9.6%, while Treasury bills are yielding 1.6%. What expected return is predicted by the CAPM for a stock with a beta of 0.5? Enter answer in percents.

2. Scite Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 2 years to maturity that is quoted at 108.6 percent of face value. The issue makes annual payments and has a coupon rate of 8.7 percent annually. What is the firm's pretax cost of debt? (Enter answer in percents.)

3. Borkshire Castaway has preferred stock outstanding that is currently selling for $52.05 a share and pays a dividend of $3.4 per share. The rate of return on the market portfolio is 8.51 percent, the risk free rate is 3.2 percent, and the firm's tax rate is 31 percent. What is Borkshire's cost of preferred stock? Enter answer in percents.

4. Parole Co. has 77,910 bonds outstanding that are selling at par value. The bonds yield 8.5 percent. The company also has 5.4 million shares of common stock outstanding. The stock has a beta of 1.2 and sells for $46.3 a share. The U.S. Treasury bill is yielding 3.5 percent and the market risk premium is 8.3 percent. Parole's tax rate is 32 percent. What is the firm's weighted average cost of capital? Enter the answer in percents.

Reference no: EM132046067

Questions Cloud

Individual or limited partner venture capitalists generally : Individual or limited partner venture capitalists generally

Weights used in the computation of project flotation costs : The weights used in the computation of a project's flotation costs should be based on the:

Describe a classified income statement : Describe a classified income statement. Be sure to address the classified income statement's four sections and the important financial relationships found

Calculate the mean square for marital status : What are the degrees of freedom for 1) gender, 2) marital status, 3) interaction between gender and marital status, and 4) error or within variance?

What is the firm pretax cost of debt-cost of preferred stock : The issue makes annual payments and has coupon rate of 8.7 % annually. What is the firm's pretax cost of debt? What is Borkshire's cost of preferred stock?

Compute total amount of raymond bonus : Raymond moss gets an annual bonus of 15% of any income, Compute total amount of Raymond's bonus and compute income tax expense

Times interest earned profitability-operating profit margin : What is the fixed asset turnover, total asset turnover, total debt to total assets, times interest earned profitability, operating profit margin,

What is the expected value of this stock ten years from now : SRS, Inc. just paid an annual dividend of $2.77 last month. What is the expected value of this stock ten years from now?

Prepare the necessary year-end adjusting entries : Assuming all quarterly adjusting entries were properly recorded, prepare the necessary year-end adjusting entries at the end of June 30, 2016

User Account

All Pages