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1. Sentry Manufacturing just paid a dividend $5 per share. The dividend is expected to grow at a constant rate of 7% per year. The price of Sentry Manufacturing's stock today is $32 per share. If Sentry Manufacturing decides to issue new common stock, flotation costs will equal $2.70 per share. Sentry Manufacturing's marginal tax rate is 35%. Based on the above information, the cost of retained earnings (internal equity) is
A) 23.72%.
B) 24.12%.
C) 26.62%.
D) 25.26%
2. James Construction Co. is considering a new inventory system that will cost $950,000. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one, $350,000 in year two, $150,000 in year three, and $180,000 in year four. The required rate of return is 8%. What is the payback period of this project?
A) 4.00 years
B) 3.56 years
C) 2.91 years
D) 2.50 years
If Paymaster plans to borrow 90,000 for a period of 2 months, what is the annualized cost of the bank loan?
what is the invoice price of the bond? Assume that the month has 30 days.
XTC retains 30 percent of the fire risk associated with this line of business,
What was the flotation cost as a percentage of funds raised?
What is your best estimate of the after-tax cost of debt? What is the company’s total market value of debt?
Jackson Street Repair’s stock currently sells for $55 per share. The market requires a 12% return on the firm’s stock. If the company maintains a constant 5% growth rate in dividends, what was the most recent dividend per share paid on the stock?
If the expected market risk premium is 8.6%, what is your cost of equity capital? What is its cost of common stock?
Assume the role of a swap dealer and present three possible equity swap proposals, which are based on the three different types of cash flows that could be paid against payment of the return on the stock.
What is the effect on the U.S. production-possibility curve? - What is the effect on the U.S. willingness to trade?
With a start-up cost of $2, benefits of $5 per year for one year and an internal rate of return of 150.00%. With a capital budget of $9 and a company wide return on assets of 10%, which of these projects would you undertake? What would your answer be..
If new common stock is issued, the company will incur floatation cost of 6%. what's the company's cost of retained earning?
Fama’s Llamas has a WACC of 10.3 percent. The company’s cost of equity is 13.2 percent, and its pretax cost of debt is 8.9 percent. The tax rate is 40 percent. What is the company’s target debt–equity ratio?
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