What is the cost of common stock

Assignment Help Financial Management

Reference no: EM131186484

Firm ABC has a current capital structure of $45.3M in Common Stock and $18.3M in Coupon Bonds. The bonds have a YTM of 6.4% and firm has a tax rate of 35%. If the firm calculates a WACC of 7.2%, what is the cost of common stock? A) 8.43% B) 7.52% C) 10.24% D) 6.51%

Reference no: EM131186484

Questions Cloud

Prepare an income statement for the year ended : Prepare an income statement for the year ended December 31, 2012, through gross profit for Aframe Company using the following information. Assume Aframe Company sold 1,100 units at $93 per unit.

Examples of sytematic risk : Which of the following are examples of Sytematic Risk?

What is your dollar return : Two years ago, you bought 200 shares of Stock XYY at $84.25 per share. During the first year, it paid a dividend of $.15 per quarter. During the second year, it paid a dividend of $.22 per quarter. If you sold it today at a price of $78.24, what is y..

What is the discounted payback period for these cash flows : An investment project has annual cash inflows of $3,800, $4,700, $5,900, and $5,100, for the next four years, respectively. The discount rate is 14 percent. What is the discounted payback period for these cash flows if the initial cost is $8,600?

What is the cost of common stock : Firm ABC has a current capital structure of $45.3M in Common Stock and $18.3M in Coupon Bonds. The bonds have a YTM of 6.4% and firm has a tax rate of 35%. If the firm calculates a WACC of 7.2%, what is the cost of common stock?

Explain how much loss mike can deduct on his tax return : Wrie a memo to your partner, citing the relevant tax authority, to explain how much of the $85,000 loss Mike can deduct on his tax return. Assume the same facts as above except the computer software company is a limited liability company

Calculate the average amount and value of tube : Calculate the average amount and value of tube stock holding. What is the cost impact of this amount of holding. Note: All strollers use the same tube.

Why must firms adopt the identified roles : In general, identify senior management's specific role in these large-scale strategic quality programs? Cheerleader? Role model? Decision maker? Resource provider? What else? Why must firms adopt the identified roles? What is the risk of not using ..

Explain the concept and process distributions : What is the difference between Common and Preferred Stock? Explain the concept and process (recording) of Distributions - Dividends and Redemptions (Treasury Stock)

User Account

All Pages