Homework Answers
2
| Price = recent dividend* (1 + growth rate )/(cost of equity - growth rate) |
| 28 = 1.3 * (1+0.07) / (Cost of equity - 0.07) |
| Cost of equity% = 11.97 |
| Please ask remaining parts seperately, questions are unrelated |
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2. Falon Corp. is issuing new common stock at a market price of $28. Dividends last...
(Cost of internal equity) Pathos Co.'s common stock is currently selling for $23.86. Dividends paid last...
(Cost of internal equity) Pathos Co.'s common stock is currently selling for $23.86. Dividends paid last year were $0.90. Flotation costs on issuing stock will be 11 percent of market price. The dividends and earnings per share are projected to have an annual growth rate of 8 percent. What is the cost of internal common equity for Pathos? The cost of internal common equity for Pathos is%. (Round to two decimal places.) (Cost of debt) Carraway Seed Company is issuing...
11. (Cost of Debt) Belton is issuing a Rs 1,000 par value bond that pays 8...
11. (Cost of Debt) Belton is issuing a Rs 1,000 par value bond that pays 8 percent annual interest and matures in 14 years. Investors are willing to pay Rs975 for the bond. Flotation costs will be 12 percent of market value. The company is in 30 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?
B) Glendale Farms Co, is issuing a $1,000 par value bond which pays 7 percent annual...
B) Glendale Farms Co, is issuing a $1,000 par value bond which pays 7 percent annual interest and matures in 15 years. As an investor to the company, you are willing to pay $850 for the bond. Flotation costs will be 3 percent of market value. The company is at a 30 percent marginal tax bracket. What will be the firm's after-tax cost of debt on the bond. (Look at the Cost of Debt section for guidance Similar to ex...
(Cost of debt) Carraway Seed Company is issuing a $1000 par value bond that pays 7...
(Cost of debt) Carraway Seed Company is issuing a $1000 par value bond that pays 7 percent annual interest and matures in 12 years. Investors are willing to pay $955 for the bond. Flotation costs will be 13 percent of market value. The company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on the bond? The firm's after-tax cost of debt on the bond will be % (Round to two decimal places.)
Carraway Seed Company is issuing a $1,000 par value bond that pays 6 percent annual interest and matures in 5 years. Inv...
Carraway Seed Company is issuing a $1,000 par value bond that pays 6 percent annual interest and matures in 5 years. Investors are willing to pay $955 for the bond. Flotation costs will be 14 percent of market value. The company is in a 40 percent tax bracket. What will be the firm's after-tax cost of debt on the bond? The firm's after-tax cost of debt on the bond will be....%?
(Cost of debt) Carraway Seed Company is issuing a $1,000 par value bond that pays 8...
(Cost of debt) Carraway Seed Company is issuing a $1,000 par value bond that pays 8 percent annual interest and matures in 15 years. Investors are willing to pay $950 for the bond. Flotation costs will be 13 percent of market value. The company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on thebond? The firm's after-tax cost of debt on the bond will be %. (Round to two decimal places.)
The company issues a $1,000 par value bond that pays 7% annual interest and matures in...
The company issues a $1,000 par value bond that pays 7% annual interest and matures in 15 years. Investors are willing to pay $958 for the bond. Flotation costs will be 11 % of market price. The company is in the 34% marginal tax bracket. Calculate the cost of debt.
?(Individual or component costs of? capital)?Compute the cost of capital for the firm for the? following:...
?(Individual or component costs of? capital)?Compute the cost of capital for the firm for the? following: a. A bond that has a ?$1,000 par value? (face value) and a contract or coupon interest rate of 10.3 percent. Interest payments are ?$51.50 and are paid semiannually. The bonds have a current market value of ?$1,128 and will mature in 10 years. The? firm's marginal tax rate is 34 percent. b. A new common stock issue that paid a ?$1.82 dividend last...
(Individual or component costs of capital) Compute the cost of capital for the firm for the...
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.84 dividend...
source of capital Target market proportions long term debt 20% preffered stock 10 common stock equity...
source of capital Target market proportions long term debt 20% preffered stock 10 common stock equity 70 A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Debt: The firm can sell a 12-year, $1,000 par value, 7 percent semiannual coupon bond for $950. A flotation cost of 2 percent of the face value would be required. Note: Floatation cost only occurs if new security needs to be offered. Preferred...
(Cost of internal equity) Pathos Co.'s common stock is currently selling for $23.86. Dividends paid last year were $0.90. Flotation costs on issuing stock will be 11 percent of market price. The dividends and earnings per share are projected to have an annual growth rate of 8 percent. What is the cost of internal common equity for Pathos? The cost of internal common equity for Pathos is%. (Round to two decimal places.) (Cost of debt) Carraway Seed Company is issuing...
11. (Cost of Debt) Belton is issuing a Rs 1,000 par value bond that pays 8 percent annual interest and matures in 14 years. Investors are willing to pay Rs975 for the bond. Flotation costs will be 12 percent of market value. The company is in 30 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?
B) Glendale Farms Co, is issuing a $1,000 par value bond which pays 7 percent annual interest and matures in 15 years. As an investor to the company, you are willing to pay $850 for the bond. Flotation costs will be 3 percent of market value. The company is at a 30 percent marginal tax bracket. What will be the firm's after-tax cost of debt on the bond. (Look at the Cost of Debt section for guidance Similar to ex...
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.84 dividend...
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