Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lingenburger Cheese Corporation has 5 . 4 million shares of common stock outstanding, 3 0 0 , 0 0 0 shares of 4 . 1

Lingenburger Cheese Corporation has 5.4 million shares of common stock outstanding, 300,000 shares of 4.15 percent preferred stock outstanding, par value of $100, and 150,0005.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $72.75 per share and has a beta of 1.10, the preferred stock currently sells for $104.00 per share, and the bonds have 25 years to maturity and sell for 103.4 percent of par. The market risk premium is 6.6 percent, T-bills are yielding 3.2 percent, and the firms tax rate is 25 percent.
What is the firm's market value capital structure?
Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g.,.1616.
What is the firm's cost of each form of financing?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,32.16.
If the firm is evaluating a new investment project that has the same risk as the firms typical project, what rate should the firm use to discount the projects cash flows?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations In Personal Finance

Authors: Dave Ramsey

College Edition

1936948001, 978-1936948000

More Books

Students also viewed these Finance questions