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1. A company is financed with equity and 10-year bonds that have face value of 1,300 and coupon rate of 5%. If each bond is
1. A company is financed with equity and 10-year bonds that have face value of 1,300 and coupon rate of 5%. If each bond is selling for 956.71 today, the company's cost of debt is:
2. If the Bank of Palestine raises interest rate, the cost of debt for a company that is financed with fixed-coupon long-term bonds will
Select one:
a. Decrease
b. Increase and Decrease
c. Increase
d. Stay the same
3. The XY firms common stock is currently selling for $78 per share. The firm expects to pay cash dividends of $8 per share next year. The firms dividends have been growing at an annual rate of 9%, and this is expected to continue into the future. The stock must be underpriced by $4 per share, and flotation costs are expected to amount to $2 per share. The firm can sell an unlimited amount of new common stock under these terms. Calculate Cost of new common stock?
Select one:
a. 20.11%
b. 10.26%
c. 11.25%
d. 22
4. XY Company is expected to pay an annual dividend of $0.95 a share next year. The market price of the stock is $55 and the growth rate is 5 percent. What is the firm's cost of equity?
Select one:
a. 6.72%
b. 8.57%
c. 9%
d. 6%
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