Question
How do you do part d? a)GHI Company's current share price is $17.65 and it is expected to pay a $0.7 dividend per share next
How do you do part d?
a)GHI Company's current share price is $17.65 and it is expected to pay a $0.7 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 5.8% per year.
What is an estimate of GHI Company's cost of equity? - solved: 9.77%
b)GHI Company also has preferred stock outstanding that pays a $1.9 per share fixed dividend. If this stock is currently priced at $30.65 per share, what is GHI Company's cost of preferred stock?- solved: 6.2%
c)GHI Company has existing debt issued three years ago with a coupon rate of 6%. The firm just issued new debt at par with a coupon rate of 6%. What is GHI Company's pre-tax cost of debt?- solved: 6%
d)GHI Company has 5 million common shares outstanding and 3 million preferred shares outstanding, and its equity has a total book value of $40 million. Its debt has a market value of $15 million. If GHI Company's common and preferred shares are priced at $17.65 and$30.65, respectively, what is the market value of GHI Company's assets (in millions)
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