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Cost of Common Equity and WACC Patton Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 11% and its marginal tax rate is 40%. The current stock price is P0 = $24.00. The last dividend was D0 = $3.50, and it is expected to grow at a 5% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places.
rs = ? %
WACC = ? %
The company has 250,000 shares of common stock outstanding at a market price of $28 a share. Next year’s annual dividend is expected to be $1.55 a share. The dividend growth rate is 2%. What is WACC for the company? The company want to raise 5 millio..
A portfolio manager in charge of a portfolio worth $50 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below$45 mil..
"Family Dispute." When Trudy and Mark married, they both had children from previous marriages. After their marriage, Trudy and Mark purchased a home together as tenants by the entirety and lived there for many years. Mark died when he was 93 and Trud..
Explain the benefit-based principle in taxation. Also explain how this principle is linked to the Lindhal equilibrium in local public finance choice
Mr. Bill. S. Preston, Esq., purchased a new house for $100,000. He paid $15,000 upfront and agreed to pay the rest over the next 10 years in 10 equal annual payments that include principal payments plus 13 percent compound interest on the unpaid bala..
An asset is considered impaired when
Chelsea, who is self-employed, drove her automobile a total of 20,000 business miles in 2015. This represents about 75% of the auto's use. She has receipts as follows: Parking (business only) $500 Tolls (business only) 200 Repairs $1,000 Chelsea has ..
You open a brokerage account and purchase 200 shares of Google at $443.05 per share. You borrow 40% from your broker to help pay for the purchase. The interest rate on the loan is 8%. Assume the day after your stock purchase, Google announces abys..
Sqeekers Co. issued 13-year bonds a year ago at a coupon rate of 8.5 percent. The bonds make semi annual payments and have a par value of $1,000. If the YTM on these bonds is 6.8 percent, what is the current bond price?
When Professor Show endows an annual lecture series at School of Public Administration at the University he stipulates that only the interest income derived from his gift may be used for to fund the program. The SPA places the gift in its ___________..
Currency Futures Definition. What are currency futures? How do they differ from currency forwards?
Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $33 a share. The stock just paid a dividend of $3.50 a share (i.e., D0 = $3.50), and the dividend is expected to grow forever at a constant rate of 6% a year. What stock pric..
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