Determine the firm''s cost of capital

Assignment Help Business Management
Reference no: EM132900589

Given the following information:

Interest rate9%Tax rate30%Dividend$2.50Common stock on the market $50Growth rate8%Debt ratio40%

a. Determine the firm's cost of capital.

b. If the debt ratio rises to 50 percent and the cost of funds remains the same, what is the new cost of capital?

c. If the debt ratio rises to 60 percent, the interest rate rises to 11 percent, the price of the stock falls to $35 and the company had to issue additional securities with flotation costs of 5%, what is the cost of capital? Why is this cost different?

Reference no: EM132900589

Questions Cloud

Explain how genetics and epigenetics affects : Please explain how genetics and epigenetics affects:Us as a person;How we view and interact with others,
Explain potential cause of employee lack of motivation : You would like the production employees at your company to be more motivated to complete their assignments more efficiently.
Determine various scenarios for projecting sales : If we are using the What If Analytics (like Scenario Manager and Goal Seek) of Excel to determine various scenarios for projecting sales.
Advantages and disadvantages of a disciplinary price list : 5. Should public employees have the same right to strike as private-sector employees are granted under the LMRA? Why or why not?
Determine the firm''s cost of capital : a. Determine the firm's cost of capital. b. If the debt ratio rises to 50 percent and the cost of funds remains the same, what is the new cost of capital?
Explain wide range of guidance including bibliotherapy : The library provides a wide range of guidance including bibliotherapy. This process assists in mitigating certain issues among clients, Discuss the concept bib
Initiate a professional development strategy : Initiate a professional development strategy that requires an assessment of leadership aptitudes and philosophies, as well as a strategy for further developing
Explain the automatic vigilance effect : -Explain the Automatic Vigilance Effect and the Ingratiation Effect through the lens of how they have been manifested in your organization.
Explain stakeholders in the community : How would the policies affect key stakeholders in the community? Consider providing Walmart"s present location and exploring the impact of a positive environmen

Reviews

Write a Review

Business Management Questions & Answers

  Concepts about ethical issues around competency

Identify and describe the concepts about ethical issues around competency.

  The presentation topic is overcoming stage fright

Prepare the outline for your presentation that includes the following elements:

  Case study custom vans inc

Custom Vans Inc. specializes in converting standard vans into campers. Depending on the amount of work and customizing to be done, the customizing could cost less than $1,000 to more than $5,000. In less than four years, Tony Rizzo was able to exp..

  Explain how your idea fits with your lifestyle requirements

How your idea fits with your skill bank and lifestyle requirements. Assess whether it appears financially sound and compare potential rewards versus risks.

  Assume a total sales revenue

1. What types of items would make up your fixed costs? Assume that these total $6,000 per year. 2. What types of items would make up your variable costs? Assume that these total $8,000 per year. 3. What is your opportunity cost? 3. Assume a tot..

  Determine the challenges and issues

Conduct research online to determine the challenges and issues that are related to information technology (IT) management. Discuss the specific controls

  Develop statement of business ethics-code of ethics

Develop statement of business ethics, code of ethics, for your startup company. Our Company expects all employees to maintain high level of ethical standards

  About server virtualization and cloud computing

Describe the organization's environment, and evaluate its preparedness for virtualization. Explain Microsoft licensing for virtualized environments.

  Critically examine the sourcing methods and supplier base

a) to critically examine the sourcing methods and supplier base b) to propose a strategic source framework which can lead to procurement excellence and value g

  Describe the measureable value

Improved order fulfillment = 10-20% decrease in order to delivery time. This will improve customer satisfaction and retentionImproved data accuracy

  Explain the differences between outcomes

Explain the differences between outcomes, causes, and risks. Give an example of each. What happens if you confuse them

  Successful small bookstore competing with a new book

The movie You've Got Mail features a successful small bookstore competing with a new book superstore around the block. The big superstore offers deep discounts

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!

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