Capital structure weight of the firms preferred stock

Assignment Help Financial Management

Reference no: EM131336161

S&W has 21,000 shares of common stock outstanding at a price of $29 a share. It also has 2,000 shares of preferred stock outstanding at a price of $71 a share. The firm has 7 percent, 12-year bonds outstanding with a total market value of $386,000. The bonds are currently quoted at 100.6 percent of face and pay interest semiannually. What is the capital structure weight of the firm's preferred stock if the tax rate is 34 percent?

A) 11.84 percent

B) 9.00 percent

C) 13.63 percent

D) 12.49 percent

E) 8.24 percent

Reference no: EM131336161

Questions Cloud

What are the effects on cash flow : A project currently generates sales of $7 million, variable costs equal 60% of sales, and fixed costs are $1.4 million. The firm’s tax rate is 40%. Assume all sales and expenses are cash items. What are the effects on cash flow, if sales increase fro..

Thorough break down for easiest comprehension : You borrow $85,000; the annual loan payments are $8,273.59 for 30 years. What interest rate are you being charged? Please give a thorough break down for easiest comprehension.

When calculating the at salvage value of an asset : When calculating the AT salvage value of an asset, we need to determine whether there's a gain or a loss on the sale, and what the tax liability will be. How is all that determined?

Sunk cost-allocated cost and opportunity cost : Describe and give an example of each: a sunk cost, an allocated cost, an opportunity cost. When should these costs be included and when should they be ignored in developing project cash flows?

Capital structure weight of the firms preferred stock : S&W has 21,000 shares of common stock outstanding at a price of $29 a share. It also has 2,000 shares of preferred stock outstanding at a price of $71 a share. The firm has 7 percent, 12-year bonds outstanding with a total market value of $386,000. T..

Formula to price call option ck for the volatility values : Give S0=100 (initial stock price), K=106 (strike price), T=t=1 (year) and r=0.03 (interest rate), use the Black Scholes formula to price a call option Ck for the volatility values wn=0.06n (2≤n≤6). Use these five observations to plot a graph of C ver..

Compute the land-buildings and equipment : Interpreting and Applying Disclosures on Property and Equipment Following are selected disclosures from the Evett and Sternard Company (a specialty chemical company) 2007 10-K. Compute the PPE (land, buildings and equipment) turnover for 2007. Evett ..

Sketch the payout function for the trigger call : A trigger call option lets the holder buy a stock at a aprice K, but only if the stock price is above H at the time of expiry (H greater than K) Sketch the payout function for the trigger call. Develop an analytic formula for the price of this option..

Calculate the minimum transfer balance required : The cash manager of Verematic, Inc., is contemplating the choice between using a wire transfer and an EDT. He estimates that his investment opportunity rate is 9%. The bank's ECR is currently 4%, and the reserve requirement is 12%. Calculate the mini..

User Account

All Pages