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Alpha Ltd wishes to know its overall cost of capital and the management has come to you for assistance on how to compute the component costs. Advice
i) The company has an issue of preferred stock with a sh. 5 stated dividend that just sold for sh. 87 per share.
ii)The company has just issued a dividend sh. 2.60 per share on its common stock. The company is expected to maintain a constant 6% growth rate in its dividends indefinitely. If the stock sells for sh. 60 a share, what is the cost of equity?
iii) The company has an outstanding debt of sh. 10M with a par value of sh. 100 per bond. The issue makes annual interest payments of 15%. Assuming a tax rate of 40%, determine the cost of debt.
iv) If the company maintains a capital structure of 60%, 30% and 10% respectively for equity, debt and preferred stock, compute the weighted average cost of capital.
David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 9.96%. What is the co..
The board of ABC would like sales to grow to $810,500 in 2017. They plan to keep the dividend payout ratio the same.
What is the initial investment outlay (IO) for the NPV evaluation of the project?
Indicate for each case in part a whether the bond is selling at a discount, at a premium, or at its par value.
And why Macaulay duration always increases with maturity for bonds selling at par or at a premium? Why holding other factors constant, the Macaulay Duration of a coupon bond is higher when the bond's yield is lower?
The purpose of this problem is to determine how effective marginal tax rates arc affected by the itemized deduction and personal exemption phase outs.
inventory financing raymond manufacturing faces a liquidity crisis-it needs a loan of 100000 for 1 month. having no
Choose one of the assumptions, constraints, primary characteristics, secondary characteristics, or elements of accounting as found in the conceptual framework of accounting.
Explain the various aspects of finance that management.Describe why a manager needs to understand the characteristics and importance of financial markets
Calculate the average return, standard deviation, and coefficient of variation for Van Dyke. Explain how the standard deviation and coefficient of variation?
What royalties or secondary taxes are applied on gold mining in: South Australia Western Australia Victoria The Northern Territory What is different about the r
Suppose you have been presented with an opportunity to play a coin flipping game with the following payoffs: heads, you get $10, but tails
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