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1. Cost of Preferred Stock
Tunney Industries can issue perpetual preferred stock at a price of $56.50 a share. The stock would pay a constant annual dividend of $6.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. %
2. Cost of Common Equity
Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 10%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 13.20%. What is Percy's cost of common equity? Round your answer to two decimal places. %
Delta Inc. is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually. The firm has a marginal tax rate of 34 percent, and its required rate of re..
Ten years ago Reem and Forsan took out a $150,000 mortgage to buy their new house. Should they still refinance the mortgage?
What is the future worth of the second satellite? What is the future worth of the first satellite?
Use the Percent of Sales method to project the 2008 financial statements for the firm. How much AFN doe the firm require?
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What are some legitimate drivers of a low PE-multiple? Why? What are some legitimate drivers of a high PE-multiple? Why?
Moonscape has just completed an initial public offering. The firm sold 6 million shares at an offer price of $12 per share. The underwriting spread was $.30 a share. The price of the stock closed at $18 per share at the end of the first day of tradin..
Notice the behavior of the yield curve and the S&P 500 between July 28, 1998, and October 19, 1998. In August 1998, Russia defaulted on billions of dollars of foreign debt.
Since their introduction, stock index futures contracts have become very popular and are now widely traded by finance professionals. What is the fourth primary factor involved in stock index futures contract pricing, and how does this factor affect s..
An investor can design a risky portfolio based on two stocks, The correlation coefficient between the returns of A and B is 0.50.
A stock has an expected return of 12.6 percent, the risk-free rate is 7 percent, and the market risk premium is 10 percent. What must the beta of this stock be?
An investment project provides cash inflows of $735 per year for eight years.
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