Calculate the cost of capital for a project

Reference no: EM13332587

Calculate the cost of capital for a project with the following characteristics.

* The total amount required for the project is 22.6 million dollars.

* A loan for 3.4 million will be requested, at an interest rate of 11.2 percent with 3 payments per year, interest compounded at every payment

* A bond issue for 5.2 million will be open, paying a bond rate of 8.4 percent with 4 payments per year.

* The remaining amount will be financed by issuing common stock. The dividends payed are 9.27 and the average price of the stock is 127.28

* The applicable tax rate is 38 percent.

Reference no: EM13332587

Questions Cloud

Find the momentum of the combined object : A 5.0 kg object is moving to the right at 4 m/s and collides with another object of mass 10 kg moving to the left at 5 m/s. Find the momentum of the combined object

Use declining balance : A printing machine had an initial investment of 2,432,067 and a salvage value of 46,808 after a useful life of 15 years. Determine the depreciation of the machine during the 4th years of use. Use declining balance

Declining balance depreciation method : A printing machine had an initial investment of 3,803,723 and a salvage value of 61,837 after a useful life of 13 years. Determine the depreciation rate to use in the Declining balance depreciation method.

Determine feasible alternatives from technical perspective : Determine the feasible alternatives from a technical perspective for project options A,B,C,D,E and F to be combined as described below:

Calculate the cost of capital for a project : The total amount required for the project is 22.6 million dollars. A loan for 3.4 million will be requested, at an interest rate of 11.2 percent with 3 payments per year, interest compounded at every payment. A bond issue for 5.2 million will be open..

Determine the velocity of the second log : A lumberjack (mass = 98 kg) is standing at rest on one end of a floating log (mass = 290 kg) that is also at rest. Determine the velocity of the second log if the lumberjack comes to rest on it

Compounded continuously : How much money will be available at the end of each year to be withdrawn if an account with 22,000 today is to be depleted in 12 periods. The account will pay 6.0 percent per year compounded continuously?

Compute the payback period : A project requires an inital nvested of 18,000 dollars. The instream cashflow is 1300 dollars per year. The time value of money is 3 percent. Compute the payback period

How and when the concept could be used by eec : How and when the concept could be used by EEC and how the application of the concept differs from the other concepts

User Account

All Pages