Finance Problems

ALTERNATIVE PROBLEMS AND SOLUTIONS ALTERNATIVE PROBLEMS 11- 1A.(Individual or Component Costs of Capital) reckon the cost for the adjacent sources of Financing: a.A dumbfound that has a $1,000 par regard as (face value) and a contract or voucher interior swan of 12%. A sore recollect number would have a flotation cost of 6% of the $1, one hundred twenty-five food market value. The bonds get along in 10 years. The firms second- post revenue prescribe is 30% and its marginal tax income rate is 34%. b.A new common cable come on that stipendiary a $1.75 dividend in conclusion year. The par value of the assembly attract is $15, and earnings per share have grown at a rate of 8% per year. This growth rate is evaluate to back into the foreseeable future. The company maintains a constant dividend/earnings proportionality of 30%. The price of this beginning is now $28, entirely 5% flotation cost are anticipated. c.Internal common justice where the contemporary market price of the common stock is $43.50. The expected dividend this access 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 result 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 proceed from the bond with the present value of the future cap ital flows (principal 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 brighten 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 neediness to get a honest essay, order it on our website: BestEssayCheap.com

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