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financial management II please answer as soon asap You are an investment managor at Socurities Investment PLC and you are advising the management of Microprocessors
financial management II
please answer as soon asap
You are an investment managor at Socurities Investment PLC and you are advising the management of Microprocessors Limited, a manufacturer of microchips, on its capital structure. The following information is available to you to assist your assessment. The fim: i. has issued 10% preferrod share which sold for $100 per share par value. The cost of issuing and sclling the stock was $2 per share. ii. has common share with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. Growth rate in dividends has been 5%. iii. can borrow funds by selling $1000 par value 10% coupon interest rate, 10-year debt. To sell securitics, an average discount of $30 per bond is given. Assume that the tax rate is 35% iv. has the following capital structure which it considers optimal: A. Determine the: i.beforeandafter-taxcostofdebt.ii.costofpreferredstock.iii.costofcommonstock.iv.Weightedaveragecostofcapital.(4marks)(2marks)(2marks) B. The firm has a beta of 1.4. The market retum equals 12% and the risk-fice rate of return is (3 marks) You are an investment manager at Securities Investment PLC and you are advising the management of Microprocessors Limited, a manufacturer of microchips, on its capital structure. The following information is available to you to assist your assessment. The firm: 1. has issued 10% preferred share which sold for $100 per share par value. The cost of issuing and selling the stock was $2 per share. ii. has common share with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. Growth rate in dividends has been 5%. iii. can borrow funds by selling $1000 par value 10% coupon interest rate, 10 -year debt. To sell securities, an average discount of $30 per bond is given. Assume that the tax rate is 35% iv. has the following capital strueture which it considers optimal: A. Determine the: i. before and after-tax cost of debt. ii. cost of preferred stock. (manks) iii. cost of common stock. (2 marks) iv. weighted average cost of capitalStep by Step Solution
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