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Meacham Corp. wants to issue bonds with a 9% coupon rate, a face value of $1,000, and 12 years to maturity. Meacham estimates that the bonds will sell for $1,090 with issuing (flotation) costs will equal $15 per bond - which reflects an 8% before tax cost of debt on the bonds. Meacham's preferred stock currently sells for a price of $36 per share, and their dividend payment is 8% on these $100 par value preferred stocks. Meacham's common stock has a beta of 1.4 and the risk free rate associated with common stock is 4%. The average return of the market as a shoe for common stocks is 10%. Meacham's marginal tax rate is 38%. Meacham's capital structure is 40% debt, 50% common equity, and 10% preferred stock.
a. Calculate the after-tax cost of debt assuming Meacham's bonds are its only debt.b. Calculate the cost of preferred stock.c. Calculate the cost of common stock/equity.d. Calculate the weighted average cost of capital for Meacham's $30 million capital budget.
If the beta of Exxon Mobil is 0.65, risk-free rate is 4% and the market rate of return is 14%, calculate the expected rate of return for Exxon.
Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the expected return on this stock if the economy is normal?
Should the company increase or decrease its order size? Describe the optimal inventory policy for the company in terms of order size and frequency.
Suppose you can purchase an optical scanner today for $400. The scanner provides benefits worth $60 a year. The expected life of the scanner is tenm years. Scanners are expected to decrease in price by 20% per year.
Recreational Supplies Co. has net sales of $9,488,958, an ROE of 31.49 percent, and a total asset turnover of 3.06 times. If the firm has a debt-to-equity ratio of 1.50, what is the company's net income?
1-What role does the budgeting activity play in managerial compensation and performance evaluation?
If the stock sells for $40 per share, what is your best estimate of the company's cost of equity?
Which of the following could be permitted as eligibility requirements for a qualified pension plan?
How many of coupon bonds should East Coast Yachts issue to increase the $40 million? How many of zeroes must it issue.
What are some benefits of the international capital markets? does borrowing a portfolio of currencies offer any possible advantages over the borrowing of a single foreign currency?
A futures contract covers 5000 pounds with a minimum price change of $0.01 is sold for $31.60 per pound. If the initial margin is $2,525 and the maintenance margin is $1,000, at what price would there be a margin call?
What is the value of its current stock price? Assuming that the discount rate is 8%.
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