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The bonds your company just issued carry a yield to maturity of 9%, and you have preferred stock outstanding which pays a 7% dividend yield. Your company has a tax rate of 33%. The president of your company has just suggested to you that you issue more preferred stock and buy back your bonds. What should you tell her? a. Good idea. Since the after-tax cost of debt is lower than the after-tax cost of the preferred, your cost of capital will go down by using more preferred. b. Bad idea. Since the after-tax cost of debt is lower than the after-tax cost of the preferred, your cost of capital will go down by using more preferred. c. Bad idea. Since the cost of preferred is lower than the cost of the debt, your cost of capital will go down by using more preferred. d. Good idea. Since the cost of preferred is lower than the cost of the debt, your cost of capital will go down by using more preferred. e. Bad idea. Since the after-tax cost of debt is lower than the after-tax cost of the preferred, your cost of capital will go up by using more preferred.
If D = $1.50, g (which is constant) = 6.9%, and P = $56, what is the stock's expected capital gains yield for the coming year? 5.66 8.49 7.80 6.90 5.59.
How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate?
bartletts pears has a profit margin of 7.5 percent on sales of 26000000. if the firm has debt of 9500000 and total
Legan Corporation borrowed $15,280 at 16 1/2% for 12 years. Determine how much simple interest did the company pay? Calculate the total amount paid back?
Suppose the spot exchange rate for the Canadian dollar is Can$1.15 and the six-month forward rate is Can$1.19. Note: Both exchange rates are expressed as the number of units of foreign currency per U.S. dollar.
The portfolio's beta is 1.10. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and to use these proceeds to buy another stock with a beta of 2.24. What would your portfolio's new beta be? Round your..
Suppose that Interest Rate Parity holds. The spot rate for Euro is $1.20 and the one year forward rate is $1.23. Find out the annual rate of interest on deposits in United States?
challenge problem consider a market with only the following three risky assetsexpected return per month risk
many firms complain that implementing the requirements of section 404 is very expensive. refer to sarbanes-oxley act of
what is the ytm of the following zero-bond? for example take a 5-year bond that costs 1000 and promises to pay
What is the present value of a security which promises to pay you $5,000 in 20 years? Assume you can earn 7 percent if you were to invest in other securities of equal risk.
Mr. Jones is forty-five years old and is in good health. He is married, and has two children aged 17 and 18. He and his wife own all shares in a Limited Liability Corporation that owns a tavern and adjacent restaurant presently valued,
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