Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
On September 4, 2001, Alabama Power Co. had two issues of ordinary preferred stock that traded on the NYSE. One issue paid $1.30 annually per share and sold for $21.25 per share. The other paid $1.46 per share annually and sold for $23.05 per share. What is Alabama Power's cost of preferred stock? Using the first issue, we calculate that the cost of preferred stock is:
RP =D/P0
=$1.30/21.25
=6.12%
Using the second issue, we calculate that the cost is:
=$1.46/23.05
=6.33%
So, Alabama Power's cost of preferred stock appears to be in the 6.1 to 6.3 percent range.
CONCEPT QUESTIONS
a How can the cost of debt be calculated?
b How can the cost of preferred stock be calculated?
c Why is the coupon rate a bad estimate of a firm's cost of debt?
Describe Analysis of the financial statements with comparision of industry averages
an investment promises to pay 6000 at the end of each year for the next five years and 4000 at the end of each year for
Question 3 :Restful Industries has offered $12 million cash for all the ordinary shares in Sofa Distribution Pty Ltd. Based on recent market information, Sofa Distribution is worth $8 million as an independent operation. If the merger makes economic ..
Why does the longer-term bond's price vary more when interestrates change than does that of the shorter-term bond?
Since assembler B is the riskier of the two, management has decided to apply a required rate of return of 18 percent to its evaluation but only a 12 percent required rate of return to assembler A.
Identify resources gaps and invest in upgrading weaknesses. By identifying its weaknesses, firms can work on getting better in this area by either training or replacing the employee.
Courtney has a portfolio comprised of 48 percent stock A, 21 percent stock B, and 31 percent stock C. What is her expected rate of return if the economy is in recession?
Your coin collection contains 45 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2055, assuming they appreciate at a 5.6 percent annual rat..
what happens to bond prices quantities and interest rates if make sure to include the supply and demand graph for bonds
So how would we interpret the results of the ROE for ScottsMiracle -Gro from 2006-2010. What does it mean in terms of financial performance and what should a potential investor understand about the ratio?
Define cash conversion cycle (CCC) and explain why, holding other things constant, a firm's profitability would increase if it lowered its CCC.
Presume that a highly liquid market does not exist for long-term T-bonds and and the expected rate of inflation is a constant
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd