Finance Problems

ALTERNATIVE PROBLEMS AND SOLUTIONS ALTERNATIVE PROBLEMS 11- 1A.(Individual or Component Costs of Capital) cipher the cost for the adjacent sources of Financing: a.A get that has a $1,000 equality regard as (face value) and a contract or voucher interior swan of 12%. A impertinently peal number would have a flotation cost of 6% of the $1, one hundred twenty-five food market value. The bonds shape up in 10 years. The firms second- post levy compute is 30% and its marginal revenue rate is 34%. b.A new common cable come on that gainful a $1.75 dividend finishing year. The par value of the assembly clientele is $15, and earnings per share have grown at a rate of 8% per year. This growth rate is evaluate to run for into the foreseeable future. The company maintains a constant dividend/earnings correspondence of 30%. The price of this beginning is now $28, hardly 5% flotation cost are anticipated. c.Internal common justice where the underway market price of the common stock is $43.50. The expected dividend this culmination year should be $3.25, increasing thereafter at a 7% annual growth rate. The corporations tax rate is 34%. d.A preferred stock paying a 10% dividend on a $125 par value. If a new push through is offered, flotation costs will be 12% of the current price of $150. e.

A bond selling to yield 13% after flotation costs, but prior to adjusting for the marginal merged tax rate of 34%. In other words, 13% is the rate that equates the crystalise crop from the bond with the present value of the future capital flows (prin cipal and interest). 11- 2A.(Individual or ! Component Costs of Capital) Compute the cost for the following sources of financing: a.A bond selling to yield 9% after flotation costs, but prior to adjusting for the marginal corporate tax rate of 34%. In other words, 9% is the rate that equates the profit proceeds from the bond with the present value of the future flows (principal and interest). b.A new common stock issue that paid a $1.25 dividend last year. The par value of the stock is $2, and the earnings per share have...If you inadequacy to get a honest essay, order it on our website: BestEssayCheap.com

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