Question
18.) SheetRockMining presents the following information: Price of common stock: $54.00 Price of preferred stock: $12.80 Last paid common dividend: $4.50 Last paid preferred dividend:
18.) SheetRockMining presents the following information: Price of common stock: $54.00 Price of preferred stock: $12.80 Last paid common dividend: $4.50 Last paid preferred dividend: $1.08 Flotation cost on all shares: $1.22 Expected growth rate: 4.3% Tax rate: 39% Determine the cost of retained earnings.
12.99% | ||
7.09% | ||
10.25% | ||
11.11% | ||
none of the above |
19.) A zero coupon bond matures in 7 years and sells for $695. If the tax rate is 38% and there is a $9.00 flotation cost, what is the cost of debt?
4.958% | ||
3.276% | ||
2.452% | ||
3.383% | ||
none of the above |
20.) A firm has a lender lined up to provide funding. Bank A charges an interest rate of 8% with a $450,000 limit. Bonds could also be issued at a 10% yield. The firm has 435,000 of available retained earnings at a cost of 11.6%. Preferred stock can be issued at 11% and new common shares can be issued at 12%. If the tax rate is 41%, determine the second WACC in the MCC schedule. (capital structure: 40% debt, 10% preferred, and 50% common equity)
9.46% | ||
9.95% | ||
10.27% | ||
8.99% | ||
none of the above |
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