Question
I e =existing debt * its rate I d = new debt * its rate +Ie N d = existing shares of common stock N
Ie=existing debt * its rate
Id= new debt * its rate +Ie
Nd= existing shares of common stock
Ne=expansion/net price + Nd
1. Using the following information, calculate Id:
Format your answer in millions to the hundredths place. 14,516,000 would be entered as 14.52
The firm needs to raise $14m which it can do with debt at 6.50% or stock at $179 per share.
Existing securities:
Security | Amount | Rate or Dividend |
Bonds | $373m | 5.05%. |
Stock | 682m | $0.78 per share |
a.
Using the following information, calculate Nd:
Format your answer in millions to the hundredths place. 14,516,000 would be entered as 14.52
The firm needs to raise $13m which it can do with debt at 7.44% or stock at $125 per share.
Existing securities:
Security | Amount | Rate or Dividend |
Bonds | $365m | 4.07%. |
Stock | 639m | $0.89 per share |
b.
Using the following information, calculate Ie:
Format your answer in millions to the hundredths place. 14,516,000 would be entered as 14.52
The firm needs to raise $16m which it can do with debt at 6.06% or stock at $149 per share.
Existing securities:
Security | Amount | Rate or Dividend |
Bonds | $372m | 5.95%. |
Stock | 731m | $0.67 per share |
c.
Using the following information, calculate Ne:
Format your answer in millions to the hundredths place. 14,516,000 would be entered as 14.52
The firm needs to raise $17m which it can do with debt at 7.72% or stock at $117 per share.
Existing securities:
Security | Amount | Rate or Dividend |
Bonds | $416m | 4.70%. |
Stock | 736m | $0.93 per share |
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