Reference no: EM13199477
Individual or component costs of capital - Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following:Compute eachin % (Round to two decimal places)
1. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 12%. The bond is currently selling for a price of $1,125 and will mature in 10 years. The firm's tax rate is 34%.
2. If the firm's bonds are not frequently traded, how would you go about determining a cost of debt for this company?
3. A new common stock issue that paid a $1.75 dividend last year. The par value of the stock is $15, and the firm's dividends per share have grown at a rate of 8% per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $28.
4. A preferred stock paying a 10% dividend on a $125 par value. The preferred shares are currently selling for $150.
- A bond selling to yield 13% for the purchaser of the bond. The borrowing firm faces a tax rate of 34%.
(Determining relevant cash flows) Captain's Cereal is considering introducing a variation of its current breakfast cereal, Crunch Stuff. This new cereal will be similar to the old, with the exception that it will contain sugar-coated marshmallows shaped in the form of stars. The new cereal will be called Crunch Stuff n' Stars. It is estimated that the sales for the new cereal will be $25 million; however, 20% of those sales will draw from former Crunch Stuff customers who have switched to Crunch Stuff n' Stars and who would not have switched if the new product had not been introduced. What is the relevant sales level to consider when deciding whether or not to introduce Crunch Stuff n' Stars?
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Calculate the slope, x-intercept
: How much profit can they expect to earn if they produce 130,000 chips per week? calculate the slope, x-intercept, and y-intercept, and label the intercepts on the graph.
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What is the present value of the payment to be received
: You expect to receive a payment of $104 one year from one. Your discount rate is 4 percent. What is the present value of the payment to be received Suppose that the discount rate is 5 percent what is the present value of the payment to be received
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What is the probability that it involved a fatal accident
: In 2006 there were about 11 million commercial flights in the United States. If one is selected at random what is the probability that it involved a fatal accident?
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What price do consumers pay for the package
: Suppose that Microsoft is the only producer of operating systems and Netscape is the only producer of Web browsers. Suppose also that nobody wants an operating system without a Web browser and nobody wants a Web browser without an operating system.
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Individual or component costs of capital
: Stuff n Stars and who would not have switched if the new product had not been introduced. What is the relevant sales level to consider when deciding whether or not to introduce Crunch Stuff n' Stars?
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What are the dimensions of the carpet
: a rectangle carpet has a perimeter of 246 inches. the length of the carpet is 89 inches more than the width. what are the dimensions of the carpet?
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Express the surface area of the balloon
: A spherical weather balloon is being inflated. Beginning at 19 cm, the radius of the balloon is increasing at the rate of 2 cm per second. Express the surface area of the balloon as a function of time t (in seconds).
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What are the dimensions of the pen
: Sixty feet of fence is needed to enclose a rectangular dog pen. The length od the pen is 3 more than twice the width of the pen. What are the dimensions of the pen?
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What was the cost of the meal before the tip
: Selena left a 15% tip for a meal. The tip was $8.40. What was the cost of the meal before the tip?
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