Consider Higgins Production which has the following information about its capital structures: Debt - 1,500, 5 percent coupon bonds outstanding, $1,000 par value, 7 years to maturity, selling for 80 percent of par, the bonds make semi-annual payments
Common Stock - 100,000 shares outstanding, selling for $45 per share; the beta is 0.80
Preferred Stock - 25,000 shares of 6 percent preferred stock outstanding, currently selling for $150 per share
Market Information - 6 percent market risk premium and 4 percent risk-free rate.
Required: Calculate the following if the company has a tax rate of 36 percent. i. Total Market Value for the Firm ii. After-tax cost of Debt iii. Cost of Equity iv. Cost of Preferred Stock v. Weighted Average Cost of Capital
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3. Consider Higgins Production which has the following information about its capital structures: Debt - 4,500, 5 percent coupon bonds outstanding, $1,000 par value, 7 years to maturity, selling for 80 percent of par, the bonds make semi-annual payments. · Common Stock - 100,000 shares outstanding, selling for $35 per share; the beta is 1.20. · Preferred Stock - 19,000 shares of 6 percent preferred stock outstanding, currently selling for $150 per share. · Market Information - 6 percent market...
Consider Higgins Production which has the following information about its capital structures: Debt - 4,500, 5% coupon bonds outstanding, $1,000 par value, 7 years to maturity, selling for 80 % of par, the bonds make semiannual payments • Common Stock - 100,000 shares outstanding, selling for $35 per share; the beta is 1.20 • Preferred Stock - 19,000 shares of 6 % preferred stock outstanding, currently selling for $150 per share • Market Information - 6 %t market risk premium...
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