Question
A companys balance sheets show a total of $30 million long-term debt with a coupon rate of 9 percent that matures in 35 years and
A companys balance sheets show a total of $30 million long-term debt
with a coupon rate of 9 percent that matures in 35 years and market price of 880 dollar The
and the debt has a total current market value of $25
million. The balance sheets also show that that the company has 10
million shares of stock. The current stock price is $10 per share.
risk free is 0.06 market return is 0.14 and beta is 1.125 , . The company has 2 million shares of preferred stock with market price35 dollars and dividends of 0.15 of 90 dollar par
taxes are 40%
What is the YTM
Answer for part 1
what is the cost of common stock?
Answer for part 2
what is the cost of preferred stock
Answer for part 3
what is the total value of the capital"?
Answer for part 4
what is the risk free
Answer for part 5
what is the weight of the bond
Answer for part 6
what is the weight of the stocks?
Answer for part 7
what is the weight of the preferred stock?
Answer for part 8
what is the weighted average cost of capital?(hint make sure to apply after tax concept)
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Beyond Greed And Fear Understanding Behavioral Finance And The Psychology Of Investing
Authors: Hersh Shefrin
1st Edition
0195161211, 978-0195161212
