Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

need help on E and F if not both E would be very helpfull a. ABC currently has outstanding 12-year bond with 7% coupon that

image text in transcribedimage text in transcribedneed help on E and F if not both E would be very helpfull

a. ABC currently has outstanding 12-year bond with 7% coupon that pays semiannually, the current market price is $1075. What is ABC's cost of debt? (8 points) : (rate(12*21 000*7%/2-1075, 1000))*2 -ABC cost of debt is 6.11% b, ABC's beta is 1.15, the 20-year T-bond has a yield to maturity (YTM) of 3.25%, and the market risk premium is 7.5%. What is ABC's cost of common stock? (5 points) -3.24% + 7.5% * 1.15 ABC cost of common stock is 1 1.875% ABC's preferred dividend is $3.75 dollar and the price of ABC's preferred stock is $50. What is ABC's cost of preferred stock? (8 points) c. ABC cost of preferred stock is 7.5% Last year, ABC had earning per share (EPS) of S3.5, and ABC paid S1.6 in dividend per share. Given ABC's ROE is 9%, what is ABC's growth rate for common stock? (8 points) d. ABC growth rate for common stock is 4.89% 6 years ago, ABC issued $20 million bond at par. Assume this is the only bond that ABC has now. What is the market value of debt for ABC? (8 points) (Hint: check previous parts for necessary information) e. f. Assume ABC's dividend will continue to growth as the same pace as before, what is ABC's share price should be? (8 points)

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

Real Estate Finance

Authors: John P. Wiedemer

8th Edition

0324142900, 9780324142907

More Books

Students also viewed these Finance questions

Question

16. Explain what a flexible manufacturing system (FMS) is.

Answered: 1 week ago

Question

What were some of the team roles at Casper?

Answered: 1 week ago

Question

What were some of the team norms at Casper?

Answered: 1 week ago