Earnings available to common stock

Assignment Help Financial Management
Reference no: EM131297499

Sue Incs, earnings available to common stock of 4200000 last year, From these earnings, the company paid a dividend of $1.26 on each of its 1000000 common shares outstanding. The capital structure of the company includes 40% debt, 10% preferred stock, and 50% common stock. It is taxed at a rate of 40%. The market price of the common stock is $40 and dividends are expected to grow at a rate of 6% for the foreseeable future. The company plans to issue $2.00 dividend preferred stock for a market price of $25 per share. Flotation costs would amount to $3.00 per share. In addition, the company will also issue $1,000 par value, 10% coupon, 5 year bonds that can be sold for $1200 each. Flotation costs would amount to $25.00 per bond. What is the WACC? Please show all work. Thank You

Reference no: EM131297499

Questions Cloud

Define inside board members and outside board members : Define inside board members and outside board members. What type of compensation may motivate these directors to serve the interests of the firm's shareholders?
Of the capital budgeting methods : "Of the following capital budgeting methods, which one ignores the time value of money as it fails to take into account the cost of capital?"
Describe the role of an internal auditor : Why may shareholders prefer that the board of directors contain more outside directors than inside directors?- Can there still be conflicts of interest within the board if it is composed primarily of outside directors?
Brainstorming as a tool to support : In a word document 300 words APA style referencing you are going to use brainstorming as a tool to support your team creativity, explain why?
Earnings available to common stock : Sue Incs, earnings available to common stock of 4200000 last year, From these earnings, the company paid a dividend of $1.26 on each of its 1000000 common shares outstanding. In addition, the company will also issue $1,000 par value, 10% coupon, 5 ye..
Culture-diversity and leadership : The workplace is becoming more culturally diverse. It is important for leaders to understand and manage the differences in workplace culture and diversity.
Prepare a table showing your raw data for the dilutions : Prepare a table showing your raw data for the dilutions (ie volumes used for each dilution and for the Practical Prelab question) of the bacterial culture and the turbidity of these dilutions. Hand in a copy of these results at the end of lab.
Difference between line positions and staff positions : How would the span of control differ for a firm with numerous employees who perform similar tasks and for a firm with highly diverse tasks? What is decentralization?
Contract for the construction : The Sharon Construction Corporation has been awarded a contract for the construction of a 20,000-seat stadium. The construction must start by February 15 and be com­pleted within one year. A penalty clause of $15,000 per week of delay beyond Febru..

Reviews

Write a Review

Financial Management Questions & Answers

  Childhood obesity

For this discussion section find two peer reviewed academic journal articles that directly relate to your research topic (CHILDHOOD OBESITY) for this class. In detail, describe their methods of sampling. Be sure to include a description of the sampli..

  Dividends are expected to grow at the rate

Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2.00, a dividend in year 2 of $2.80, and a dividend in year 3 of $3.20. After year 3, dividends are expected to grow at the rate of 6% per year. An appropriate required return f..

  Normally distributed with an average historical return

The annual returns on AAA stocks are normally distributed with an average historical return of 17.3% and a standard deviation of 33.4%. What is the probability that annual return on small-company stocks is between 10% and 30%?

  What is capital intensity ratio

ABC had assets of $15 million last year; sales were $18 million; liabilities plus accruals that increased spontaneously with sales was 8% of assets; net income was $275,000 of which $120,000 was paid out in the form of dividends. What is ABC's capita..

  What is the bonds after-tax yield

An investor recently purchased a corporate bond which yields 11.5%. The investor is in the 36% combined federal and state tax bracket. What is the bond's after-tax yield?

  How much will you have in eight years

You are scheduled to receive $21,000 in two years. When you receive it, you will invest it for six more years at 9.25 percent per year. Required: How much will you have in eight years?

  Calculate the impact of the debt and equity

Using the information above together with the two following scenarios calculate the impact of the debt and equity financing alternatives if weather is good which will increase attendances and increase EBIT to $600,000

  Compute the expected net cash flows for year seven

Compute the expected net cash flows for year 7. Include in your year 7 calculations the proceeds from the salvage value of the masher and recovery of net working capital at the beginning of year 8.

  Calculate the present worth of cost

A business buys a vehicle for $6,000, uses it for 5 years, and salvages it for $1,000. The annual cost of operating the vehicle was $900. Maintenance costs are $200 for the first year and increase at a 8% annual compounded rate. The business uses an ..

  Describe hedging techniques and evaluate their effectivness

Describe the hedging techniques, and evaluate their effectiveness, that portfolio managers can use to hedge the stock market decline in china market stock crash in 2015.and in china stock market could use option and forward contract, which one is eff..

  The increase in net working capital and capital spending

Ward Corp. is expected to have an EBIT of $2,250,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $172,000, $99,000, and $122,000, respectively. All are expected to grow at 15 percent per year ..

  What is the value of the premium

Among a company’s assets and accounting records, an actuary finds a 10-year bond that was purchased at a premium. What is the value of the premium?

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