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which of the following statements is are true regarding flotation costs? A) floatation costs decrease the NPV of a project B) flotation costs are determined based on the target capital structure of the firm C) a and b are correct D) flotation costs are determined with respect to the specific capital type to be raised E) flotation costs will increase the NPV of a project.
The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. What is the yield to maturity at a current market price of $887? What is the yie..
You need to replace your car. Car A costs $10,000 and $0.50 per mile to operate. Car B costs $15,000 and $0.40 cents per mile to operate. Both cars will last five years. Car A can then be sold for $3, 500; Car B for $5,000. At a discount rate of 10%,..
Hetten house Company’s (HC) perpetual preferred stock sells for $105.50 per share, and it pays a $9.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.50% of the price paid by investors.
Finding the WACC Given the following information for Fairview Co., find the WACC. Assume the company’s tax rate is 35 percent. Debt: 7,000 8 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 104 percent of par; the..
Consider an American call option on a stock. The stock price is $70, the time to maturity is eight months, the risk-free rate of interest is 10% per annum, the exercise price is $65, and the volatility is 32%. A dividend of $1 is expected after three..
A construction company is deciding if they want to purchase some new road improvement equipment The equipment has a first cost of $70,000, it will have annual benefits to the general public of $17,000 per year, and the equipment will be sold for $12,..
The current stock price for a company is $46 per share, and there are 5 million shares outstanding. The beta for this firms stock is 1.3, the risk-free rate is 4.7, and the expected market risk premium is 6.4%. what is the Weighted Average Cost of Ca..
Sweet Treats common stock is currently priced at $17.15 a share. The company just paid $1.22 per share as its annual dividend. The dividends have been increasing by 2.4 percent annually and are expected to continue doing the same. What is this firm's..
Malkin Corp. has no debt but can borrow at 5.9 percent. The firms WACC is currently 9.6 percent, and there is no corporate tax. What is Malkins cost of equity? If the firm converts to 30 percent debt, what will it cost of equity be?
A Treasury STRIPS matures in 7 years and has a yield to maturity of 4.4 percent. if the par value is $100,000, what is the price of STRIPS? What is the quoted price?
If the option is exercised, what is the total amount of dollars paid (after accounting for the premium paid)?
Rekall Inc., the memory implant company, has 7 million shares of common stock outstanding and 100,000 semi-annual bonds. Dividends are paid annually and are expected to grow in perpetuity at 3%. The bonds sell for 94% of face value and have a 10.42% ..
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