What is the cost of preferred stock

Assignment Help Financial Management
Reference no: EM131863366

1. Grand River Corp. has a debt-equity ratio of 1 and a tax rate of 40 percent. The firm has no preferred stock. The cost of equity is 14 percent and the pretax cost of debt is 7 percent. What is the weighted average cost of capital? A. 8.46 percent B. 8.79 percent C. 9.10 percent D. 9.45 percent E. 9.82 percent

2. Sunny Land Inc. has 750,000 shares of preferred stock pay a $2.8 annual dividend per share, and sell for $40 per share. What is the cost of preferred stock? A. 5.60 percent B. 5.75 percent C. 6.25 percent D. 6.75 percent E. 7.00 percent.

Reference no: EM131863366

Questions Cloud

What is company estimated cost of equity : Assume that in today's market, rrf = 4.25%, the market risk premium is RPM = 4%, and Company XYZ's beta is 1.02.what is Company XYZ's estimated cost of equity?
Explain the two different views of the usa patriot act : Explain in your own words the two different views of the USA PATRIOT Act and why some believe it is inappropriate legislation.
What does virtualization of a server mean : Students will learn about VMware and how this software is used for virtualization of servers. What is "Virtualized servers" mean?
Calculate earnings per share : Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. Also, calculate the percentage changes.
What is the cost of preferred stock : Sunny Land Inc. has 750,000 shares of preferred stock pay a $2.8 annual dividend per share, and sell for $40 per share. What is the cost of preferred stock?
Describe the basic tenets of constructivism theory : Describe the basic tenets of constructivism theory. Describe the basic tenets of information processing theory
Expected rate of return using the capm : Calculate the expected rate of return using the CAPM where the expected return on the market is 5%, the risk free rate is 1%, and the beta is 1.5.
What will be the after-tax cost of debt for the company : Assume Company XYZ can borrow at an interest rate of 6.5%, What will be the after-tax cost of debt for the company?
Calculate the slope or beta : Calculate the slope or beta where the following facts exist: In Year 1 a share of IBM stock increased 8%, and in Year 2 it increased 10%

Reviews

Write a Review

Financial Management Questions & Answers

  Challenge ahead is to serve on board of directors

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. Schenkel has 385,000 shares outsta..

  Net cash flows in the future

A company expects the following net cash flows in the future: net cash flow (ncf) yr 1 = 100,000, ncf yr 2 = 125,000, ncf yr 3 = 150,000, ncf yr 4 = 100,000, ncf yr 5 = -25,000 (negative 25,000). Calculate the total PV of the cash flows from this pro..

  Determine the net present value of the given project

Determine the net present value of this project. Should Wolverine accept this project? Assume that Wolverine is also considering an alternative financing arrangement.

  What is the relative value of the two streams

Solve Fibonacci's annuity problem given in the Anecdote:  - What is the relative value of the two streams? Compute the difference for a 1-year investment first.

  What is company target debt-equity ratio

The tax rate is 33 percent. What is the company's target debt-equity ratio?

  How much are the earnings available for common stockholders

At the end of the year, the Long Life Bulb Company announced that it had produced a gross profit of $1,000,000. The company has also established that over the course of this year it has incurred $345,000 in operating expenses and $125,000 in interest..

  What is aftertax cash flow from the sale of asset

what is the aftertax cash flow from the sale of this asset?

  Planning to issue preferred stock

Angie’s List is planning to issue preferred stock. Using information provided, what is the cost of capital for the stock to your firm?

  What is value of inventory listed on firm balance sheet

Burt's TVs has current liabilities of $24.8 million. What is the value of inventory listed on the firm's balance sheet?

  How much net working capital does firm need to fund

JohnBoy Industries has a cash balance of $49,000, accounts payable of $129,000, inventory of $179,000, accounts receivable of $214,000, notes payable of $124,000, and accrued wages and taxes of $39,000. How much net working capital does the firm need..

  What are the pros and cons to technical analysis

What are the findings of whether followers of technical analysis can outperform the market? What are the pros and cons to technical analysis?

  Call option-what must be the risk-free interest rate

You buy a share of stock, write a one-year call option with X = $12, and buy a one-year put option with X = $12. Your net outlay to establish the entire portfolio is $11.50. What must be the risk-free interest rate %? The stock pays no dividends

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd