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The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a 8% coupon rate, pay interest annually, mature in 10 years, and have a face value of $1,000. There are 500,000 shares of 9% preferred stock outstanding with a current market price of $91 a share and a par value of $100. In addition, there are 1.25 million shares of common stock outstanding with a market price of $64 a share and a beta of .95. The most recent dividend paid by the company on the common stock was of $1.10 and it expects to increase those dividends by 3% annually forever. The firm's marginal tax rate is 35%. The overall stock market is yielding 12% and the Treasury bill rate is 3.5%.
a) What is the cost of equity based on the dividend growth model?
b) What is the cost of equity based on the security market line?
c) What market weights should be given to the various capital components in the weighted average cost of capital computation?
d) What is the weighted average cost of capital using the cost equity calculated based on CAPM?
Computing dividends on preferred and common stock and journalizing Sunrise Communications has the following stockholders' equity on December 31, 2016.
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If you enter the above positions when gold equals 1,300, compare the dollars in profit from the three ways of betting against the price of gold if gold ends up at the following prices at time t: 1100, 1150, 1200, 1250, 1300, 1350, 1400, 1450, 1500..
What are the differences between book value and market value? How are these values determined?
I am hired by a healthcare organization that owns and operates nursing homes and assisted living facilities in several states. I need assistance with writing a paper about "how to improve the overall success of the firm".
A Ford Motor Co. coupon bond has a coupon rate of 6.5?%, and pays annual coupons. The next coupon is due tomorrow
Give two reasons stockholders might be indifferent between owning the stock of a firm with volatile cash flows and that of a firm with stable cash flows.
While Mary Corns was a student at the University of Tennessee, she borrowed $12,000 in student loans at an annual interest rate of 9 percent. If Mary repays $1,500 per year, how long, to the nearest year, will it take her to repay the loan?
Using an hp 12c calculator, what is the best way to calculate effective interest rate for a mortgage?
Your company's required dollar rate of return on projects of similar risk is 10%. Inflation in the US and Japan is expected to be 3% and 2%, and the current spot rate is ¥ 125/$.
a friend obtained a 7500 car loan from a local bank at 9 interest. the loan requires 36 equal-sized monthly payments.
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