Reference no: EM131326874
Growth? Company's current share price is $20.30 and it is expected to pay a $0.90 dividend per share next year. After? that, the? firm's dividends are expected to grow at a rate of 3.8% per year.
a. What is an estimate of Growth? Company's cost of? equity?
b. Growth Company also has preferred stock outstanding that pays a $2.15 per share fixed dividend. If this stock is currently priced at $28.05?, what is Growth? Company's cost of preferred? stock?
c. Growth Company has existing debt issued three years ago with a coupon rate of 6.2%. The firm just issued new debt at par with a coupon rate of 6.9%. What is Growth? Company's cost of? debt?
d. Growth Company has 5.1 million common shares outstanding and 1.4 million preferred shares? outstanding, and its equity has a total book value of $49.9 million. Its liabilities have a market value of $19.9 million. If Growth? Company's common and preferred shares are priced as in parts ?(a?) and ?(b?), what is the market value of Growth? Company's assets?
e. Growth Company faces a 35% tax rate. Given the information in parts ?(a?) through ?(d?), and your answers to those? problems, what is Growth? Company's WACC?
|
What will be start-ups ratio of market value to book value
: Start-up Industries is a new firm, which has raised $100 million by selling shares of stock. Management expects to earn a 24% rate of return on equity, which is more than the 15% rate of return available on comparable-risk investments. Half of all ea..
|
|
Find amount of the first payment
: A loan of $100000 is to be repaid 10 annual payments beginning 1 year from the date of the loan. The first payment is to be twice as large as the others. For the first 4 years interest is at 6% effective; for the remainder of the term interest is at ..
|
|
An annuity-immediate pays an initial benefit
: An annuity-immediate pays an initial benefit of 1 per year, increasing by 10.25% every four years. The annuity is payable for 40 years. Using an annual effective interest rate of 5%, determine the present value of this annuity.
|
|
Present values of the two serious of payments are equal
: You are given two series of payments. Series A is a perpetuity with payments of 1 at the end of each of the the first 2 years, 2 at the end of each of the next 2 years, 3 at the end of each of the next 2 years, and so on. Series B is perpetuity with ..
|
|
What is an estimate of growth? company cost of? equity
: Growth? Company's current share price is $20.30 and it is expected to pay a $0.90 dividend per share next year. After? that, the? firm's dividends are expected to grow at a rate of 3.8% per year. What is an estimate of Growth? Company's cost of? equi..
|
|
Npv and irr and the payback period analysis
: Explain how capital budgeting helps companies contribute to value creation. Discuss each of the following different techniques: NPV, IRR and the Payback Period analysis.
|
|
What is? pre-tax cost of? debt-effective annual reurn
: Avicorp has a $11.7 million debt issue? outstanding, with a 6.1% coupon rate. The debt has? semi-annual coupons, the next coupon is due in six? months, and the debt matures in five years. It is currently priced at 95% of par value. What is? Avicorp's..
|
|
What is value of their stock when required rate of return
: Financial analysts forecast Best Buy Company (BBY) growth for the future to be 15.00 percent. Their recent dividend was $1.59. What is the value of their stock when the required rate of return is 16.43 percent?
|
|
Calculate wacc based on book-market-target capital structure
: Bolster Foods (BF) balance sheet shows a total of $25 million long-term debt with a coupon rate of 7.5%. The yeild to maturity on this debt is 7.00% and the debt has a total current market value of $25,875,000. Calculate WACCs based on book, market, ..
|