Cde company currently has a rate on preffered stock of 6.35% and a ytm on debt...
Homework Answers
cost of debt after tax=9.34%*(1-32%)=6.3512%
there is no tax benefit for rate on preferred stock, so cost of preferred stock after tax=6.35%
from above, cost of preferred stock is less than the cost of debt after tax, so choose the preferred stock.
the above is answer..
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Cde company currently has a rate on preffered stock of 6.35%
and a ytm on debt...
source of capital Target market proportions long term debt 20% preffered stock 10 common stock equity...
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a. The after-tax cost of debt using the bond's yield to
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The after-tax cost of debt using the approximation formula
is
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a. The after-tax cost of debt using the bond's yield to
maturity (YTM) is
The after-tax cost of debt using the approximation formula
is
b. The cost of preferred stock is
c. The cost of retained earnings is
The cost of new common stock is
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is
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Tatum can borrow at 6.7 percent. The company currently has no debt, and the cost of equity is 12.9 percent. The current value of the firm is $595,000. The corporate tax rate is 21 percent. What will the value be if the company borrows $310,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Company value
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