Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

need help with these following questions asap Coaldale Bank has an issue of preferred stock with a $5.55 stated dividend that just sold for $105

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

need help with these following questions asap

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
Coaldale Bank has an issue of preferred stock with a $5.55 stated dividend that just sold for $105 per share. What is the bank's cost of preferred stock? (Round the final answer to 2 decimal places.) Cost of preferred stock %2 Pearce's Cricket Farm issued a 30-year, 10% semiannual bond 3 years ago. The bond currently sells for 93% of its face value. The company's tax rate is 25%. Assume the par value of the bond is $1,000. a. What is the pre-tax cost of debt? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Pre-tax cost of debt % b. What is the after-tax cost of debt? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) After-tax cost of debt % c. Which is more relevant, the pre-tax or the after-tax cost of debt? O After-tax cost of debt O Pre-tax cost of debtRaymond Mining Corporation has 9.3 million shares of common stock outstanding, 420,000 shares of 5% $100 par value preferred stock outstanding, and 159,000 150% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $46 per share and has a beta of 1.40, the preferred stock currently sells for $95 per share, and the bonds have 15 years to maturity and sell for 111% of par. The market risk premium is 8.6%, T-bills are yielding 4%, and Raymond Mining's tax is 40%. a. What is the firm's market value capital structure? [Enter your answers in whole dollars.} Market: value Debt $ Equity 9* Preferred stock $ b. If Raymond Mining is evaluating a new investment project that has the same risk as the rm's typical project, what rate should the firm use to discount the project's cash ows? {Do not round intermediate calculations. Enter your answer as a percentage rounded to 3 decimal places} Discount rate |:| 96 4 Cornwell Industries stock has a beta of 1.10. The company just paid a dividend of $1.44, and the dividends are expected to grow at 4%. The expected return on the market is 10%, and Treasury bills are yielding 3.2%. The most recent stock price for the company is $72. a. Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Dividend growth model method % b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Round the final answer to 3 decimal places.) SML method %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

14th Edition

978-0132960649, 132960648, 132109174, 978-0132109178

Students also viewed these Finance questions