Find what will be price of a share of a company

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Reference no: EM132690619

Problem 1: The unlevered cost of capital is:

a) the cost of capital for a firm with no equity in its capital structure.

b) the cost of capital for a firm with no debt in its capital structure.

c) the interest tax shield times pretax net income.

the cost of preferred stock for a firm with equal parts debt and common stock in its capital structure.

equal to the profit margin for a firm with some debt in its capital structure

Problem 2: What will be the price of a share of a company with 5 million USD in balance sheet - equity, 500,000 shares of stock outstanding, and a price/book value ratio of 4 (hint: calculate book value of equity first)

a) 2.5

b) 40

c) 10

d) 50

Reference no: EM132690619

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