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Jake's Sound Systems has 210,000 shares of common stock outstanding with a book value of $10 and currently selling for $30 a share. They just paid an annual dividend in the amount of $1.60 per share. The constant dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding. The bonds carry a 7 % coupon, pay interest semi-annually, and mature in 5 years. The bonds are selling at par. There are 5,000 8% preferred shares outstanding with a stock price of $80. The company's tax rate is 34%. The current T-bills rate is 3% and the market risk premium is 4%.
1) What is the cost of equity ?
2) What is the cost of preferred shares ?
3) What is the after-tax cost of debt?
4) What is the WACC (weighted average cost of capital)?
Identify three types of competition that most firms encounter other than competition from other firms in their industry in their home country. (b) Is it good for the economy to have more competitive markets? Explain. (c) If government industry regula..
Financial ratios are designed to extract important information that might not be obvious simply from examining a firm's financial statements.
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile ser..
In general, illustrate what happens to the level of consumer surplus as the price of a good falls.
q1. a discount store has a special offer on dvd players and lowers their price from 150 to 100. assume the store
Consider a perfectly competitive, profit-max firm that sells its output for $10 each and produces and sells 925 units. Its total variable costs are $4000 and its total fixed costs are $3600. Calculate its accounting profit.
Instruction: Do not round intermediate calculations. Round your final answers to the nearest penny (two decimal places).
Suppose the price elasticity of demand for TV is estimated to be 4. What does this mean in term of responsiveness of demand?
What do you think it resulted in less standing in line by pregnant women. Do you suppose and women became pregnant in prder to cut into the long lines.
Suppose that Angie consumes only beer(B) and sandwiches (S). Her MUB = S/B and MUS = 2B/S. The price of a sandwich is $8 and the price of a beer is $4.
An individual has the following utility function: u(w) = w^.5 where w = wealth. Using expected utility, order the following prospects in terms of preference, from the most to the least preferred: Without doing any calculations, would the certainty eq..
An economy is endowed with 100 units of labor and 100 units of electricity, and 150 units of storage space to store the two final produce
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