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Question - UC's target capital structure is 40 percent debt, 50 percent common stock, and 10 percent preferred stock. Information regarding the company's cost of capital can be summarized as follows:
The company's bonds have a nominal yield to maturity of 7 percent.
The company's preferred stock sells for $42 a share and pays an annual dividend of $4 a share.
The company's common stock sells for $23 a share and is expected to pay a dividend of $2 a share at the end of the year (i.e. D1 = $2.00). The dividend is expected to grow at a constant rate of 7 percent a year.
The firm will be able to use retained earnings to fund the equity portion of its capital budget.
The company's tax rate is 40 percent.
Required -
1. Compute the individual cost of capital.
2. Compute the company's weighted average cost of capital (WACC)?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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