Question
Q1) After-Tax Cost of Debt LL Incorporated's currently outstanding 9% coupon bonds have a yield to maturity of 6.6%. LL believes it could issue new
Q1) After-Tax Cost of Debt LL Incorporated's currently outstanding 9% coupon bonds have a yield to maturity of 6.6%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is LL's after-tax cost of debt? Round your answer to two decimal places. %
Q2) Cost of Preferred Stock with Flotation Costs Burnwood Tech plans to issue some $70 par preferred stock with a 7% dividend. A similar stock is selling on the market for $85. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock? Round your answer to two decimal places. %
Q3) Cost of Equity: Dividend Growth Summerdahl Resort's common stock is currently trading at $23 a share. The stock is expected to pay a dividend of $2.75 a share at the end of the year (D1 = $2.75), and the dividend is expected to grow at a constant rate of 4% a year. What is the cost of common equity? Round your answer to two decimal places. %
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