User Account

All Pages

Cost of preferred stock capital

Assignment Help Finance Basics
Reference no: EM131139066

Ink Inc. has decided that the capital it is raising will consist of 10% preferred stock, 50% common stock, and 40% debt. Ink has outstanding 20 year annual, 6% coupon bonds selling for $894. The par value of the bonds is $1,000. Ink’s common stock sells for $50 per share and is expected to grow at 8% and expected to pay a $2 dividend next year. If Ink sells new common it must pay a $5 per share flotation fee. Ink’s preferred stock currently sells for $54, and its annual dividend is $5 per share. If Ink were to sell new preferred stock, it would pay $4 per share as flotation cost. Ink’s tax rate is 40%.

What is Ink’s?

1. After tax cost of debt capital?

2. Cost of preferred stock capital?

3. Cost common stock?

4. Cost of capital?

Reference no: EM131139066

Questions Cloud

Do the 1981 applicants have greater gre scores than previous : In the past, 20% of applicants for admission into a master's program had GRE scores above 650. Of the 88 students applying to be admitted into the program in 1981, 22 had GRE scores above 650. Do the 1981 applicants have greater GRE scores than pr..
What is the cost of each of the capital components : What is the cost of each of the capital components (debt, preferred equity, and common equity)? What is the WACC? Which investments should the firm select if the projects are all of average risk?
Brief synthesis and conclusion of the material presented : A brief synthesis and conclusion of the material presented (one page). A critical evaluation and summation of three current (no older than five years) research articles on Turner's Syndrome (one to two pages).
Find the marginal cost for the company : Based on this information, find the following: The marginal cost for the company. The marginal revenue for the company
Cost of preferred stock capital : If Ink were to sell new preferred stock, it would pay $4 per share as flotation cost. Ink’s tax rate is 40%. What is Ink’s? 1. After tax cost of debt capital? 2. Cost of preferred stock capital? 3. Cost common stock? 4. Cost of capital?
Which is likely to produce more varied meals : Mary plans the entire week's meals for her family, while Fred shops each day. Which is likely to produce more varied meals? What is this effect called?
Evaluate two of the basic tenets of person-centered theory : Analyze this information with respect to your beliefs about how problems arise and how people change. Explain the affect that person-centered theory has had on your own theoretical orientation.
A wealth of accounting related information is available : A wealth of accounting-related information is available via the Internet. For example the Rutgers Accounting Web offers access to a great variety of sources.
Discuss why global experience is often a definite plus : Discuss why global experience is often a definite plus -  when considering applicants for a CSO position.

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the rate of return of our retirement savings

For the first part of this plan, we need to calculate the rate of return of our retirement savings will earn until we reach our retirement age (67 years old). To do this we are, you will need to estimate the 5-year average rate of return of the st..

  Compute the present value

Compute the present value. Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points.

  As reported by the bureau of labor statistics the cpi for

as reported by the bureau of labor statistics the cpi for 2004 was 189.7 using a base year of 1983 100. the cpi for

  Prepare an income statement and a retained earnings

you are provided with the following information for rapp corporation effective as of its april 30 2012

  Compute expected rate of return on each stock and market

consider the following scenario analysis for stocks a and b and for the market portfolio mrate of returnstate of

  1in late 2010 you purchased the common stock of a company

1.in late 2010 you purchased the common stock of a company that has reported earnings increases in nearly every quarter

  Development of key skills and behavior by individual

Develop a list of 5 key skills or behaviors you will be working to improve. Tell me why you chose these skills. What is your current skill level in these areas?

  Draw a cash flow timeline

Amax Manufacturing Corporation collects $225,000 each day. The cash manager has just been told of a new collection system using lockboxes that could reduce collection float from seven days to six days by decreasing mail and processing float a total o..

  Financial planning and agency conflicts

Financial Planning and Agency Conflicts

  Firm average collection period

1. What is the firm's average collection period? 2. What is the firm's current receivables balance?

  Describe your view on this statement

U.S. President George W. Bush stated that while tougher laws might help, "ultimately, the ethics of American business depends on the conscience of America's business leaders." Describe your view on this statement.

  Arguments for repeal of the mccarran-ferguson act

a. Explain the major arguments for repeal of the McCarran-Ferguson Act. b. Explain the major arguments against repeal of the McCarran-Ferguson Act.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd