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Crypton Electronics has a capital structure consisting of 41 percent common stock and 59 percent debt. A debt issue of ?$1,000 par? value, 5.7 percent bonds that mature in 15 years and pay annual interest will sell for ?$974 Common stock of the firm is currently selling for ?$29.59 per share and the firm expects to pay a ?$2.34 dividend next year. Dividends have grown at the rate of 5.1 percent per year and are expected to continue to do so for the foreseeable future. What is? Crypton's cost of capital where the? firm's tax rate is 30 ?percent?
a. The? after-tax cost of debt is %.? ?(Round to two decimal? places.)
You own a stock portfolio invested 25 percent in Stock Q, 30 percent in Stock R, 30 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .75, 1.13, 1.14, and 1.31, respectively. What is the portfolio beta? (Do not round ..
Prairie Dog Products has an issue of outstanding bonds that have a 6% annual coupon, a 7 percent yield to maturity and a nine year maturity. Are these bonds selling at a premium or a discount?
Twice Shy Industries has a debt−equity ratio of 1.6. Its WACC is 8.6 percent, and its cost of debt is 6.1 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital? What would the cost of equity be if the debt−equity..
What would be the expected return on a stock given the following: the rate of return on 1 year CD's is 2%, the return on 90 day T-Bills is 4%, the return on 10 year T-Bonds is 7%, the Prime is 8%, the return on the S&P 500 is expected to be 12%, your..
Stock in Country Road Industries has a beta of 1.2. The market risk premium is 9 percent, and T-bills are currently yielding 3 percent. The company's most recent dividend was $1.9 per share, and dividends are expected to grow at a 6.5 percent annual ..
Discuss the value of foreign stocks in an investment portfolio. Do you want them? If so, which ones? Do you diversify the classes as you would domestic stock? If so, what classes would you select? Are there any countries you would avoid? What about a..
An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 17 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturi..
Profitability Ratios PJ's Ice Cream Parlor has asked you to help piece together financial information on the firm for the most current year. Managers give you the following information: sales = $57 million, total debt = $27 million, debt ratio = 43%,..
Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.79 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,110,000 in ..
A 6.15 percent coupon bond with fifteen years left to maturity is priced to offer a 7.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent. What is the change in price the bond will experience in dollar..
You opened a savings account at a bank and made an initial deposit. The account pays 8% interest compounded annually. You made no additional deposits and in exactly one year you close the account and take out off of the money. The balance at the time..
Use the following info. A corporation has 10,000,000 shares of stock outstanding at a of $60 per share. They just paid a dividend of $3 and the dividend is expected to grow by 6% per year forever. What is the required return on corporation's stock? W..
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