What can be used to estimate firm cost of debt

Assignment Help Financial Management

Reference no: EM131910297

1. What can be used to estimate the firm’s cost of debt?

A) The interest on bank loans and the YTM on the firm's bonds

B) The interest on bank loans plus a risk premium of 300 to 500 basis points

C) The YTM + risk premium of 300 to 500 basis points

D) The WACC

2. Which is a characteristic of Preferred Stock?

A) Preferred dividends are tax deductible.

B) Preferred stock must be paid before interest payments on loans.

C) Preferred stock usually does not have voting right.

D) Preferred dividends must be paid prior to coupon payments.

Reference no: EM131910297

Questions Cloud

Cash outflows are treated as negative cash flows : CFt is the expected cash flow at Time t, r is the project's risk-adjusted cost of capital, and N is its life and cash outflows are treated as negative cash flow

Solve the difference equation by generating functions : Obtain and solve the difference equation by generating functions

Use for debt when calculating cost of capital : If the company has a $46.6 million market value of equity, what weight should it use for debt when calculating the cost of capital?

What is the current price of the european put option : What is the current price of the European call option? What is the current price of the European put option?

What can be used to estimate firm cost of debt : What can be used to estimate the firm’s cost of debt? Which is a characteristic of Preferred Stock?

What are incremental earnings associated with new? machine : If? Daily's marginal tax rate is 35%?, what are the incremental earnings? (net income) associated with the new? machine?

Simple interest loan instead of simple discount loan : If we view the transaction as a simple interest loan instead of a simple discount loan, what is the simple interest rate?

Determine its cost of debt : Drogo, Inc., is trying to determine its cost of debt. What is the company’s pretax cost of debt? what is the aftertax cost of debt?

Capital structure weights on market value basis : Dinklage Corp. has 5 million shares of common stock outstanding. What are the company’s capital structure weights on a market value basis?

User Account

All Pages