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LL Incorporated's currently outstanding 9% coupon bonds have a yield to maturity of 14%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 30%, what is LL's after-tax cost of debt? Round your answer to two decimal places.
COST OF EQUITY WITH AND WITHOUT FLOTATION Javits & Sons’s common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year , and the constant growth rate is 5% a year. What is the compa..
Polycorp is about to issue debentures. The following information is available. 1. The coupon rate is 8% pa (or .08). Coupons are paid annually 2. The yield to maturity (YTM) is 0.09 pa 3. The face value is $100 4. The term is 4 years How much can the..
For a bond selling for $696, with a par value of $1000 and a coupon rate of 5.57 percent, the current yield is? General Mills has a $1,000 par value, 13-year to maturity bond outstanding with an annual coupon rate of 8.40 percent per year, paid semia..
A father is now planning a savings program to put his daughter through college. She is 13 and plans to enroll in college in 5 years, and she should graduate 4 years later. What is the expected cost of college in each of the 4 years? How much will nee..
The Boyd Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $600,000 and a remaining useful life of five years. The new machine has a purchase pri..
A company currently pays a dividend of $2.75 per share (D0 = $2.75). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of..
Suppose the average return on an asset is 12.2 percent and the standard deviation is 21.8 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to determine the probability that in any given year you wi..
A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $1,900 per month for the next three years and then $3,800 per month for two years after that. If the bank is charging customers 9.75 percent APR, ..
Assume a 25-year, $490,000 mortgage with a rate of 7.2 percent. 9 years into the mortgage, rates have fallen to 6.2 percent. What would be the monthly saving to a homeowner from refinancing the outstanding mortgage balance at the lower rate?
The Sleeping Flower Co. has earnings of $1.46 per share. If the benchmark PE for the company is 14, how much will you pay for the stock? If the benchmark PE for the company is 17, how much will you pay for the stock?
The R.M Smithers Corporation earned an operating profit margin of 11.2 percent based on sales of 10.5 million and total assets of 4.8 million last year. What was Smithers' operating return last year? Assuming the firm's operating profit margin remain..
Doogle has an equity Beta of 1.6, with market expected return of 10% and a risk free rate of 3%. Doogle’s cash flows are expected to be 80 million next year and will grow at 3% per year. Doogle has 3 million shares outstanding. What is Doogle worth t..
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