Answered step by step
Verified Expert Solution
Question
1 Approved Answer
e) $101.03 7. In one year, a firm will pay a common stock dividend of $3.35. The dividends have been growing at 6% per year.
e) $101.03 7. In one year, a firm will pay a common stock dividend of $3.35. The dividends have been growing at 6% per year. Based on analysts' forecasts, you predict that you will be able to sell your stock for $48 per share after one year. If you require a rate of return of 16 percent on your stock, how much would you be willing to pay now for a share of the stock? a) $51.37 b) $45.04 c) $42.11 d) $48.00 e) $44.27 8. Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is 6%. The bonds sold for par value, but flotation costs amounted to 2% of the price. You have a 21% corporate tax rate. What is your firm's cost of debt? a) 4.88%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started