What is the current price of a common share

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Desert Landscaping Inc. (DLI) wants to issue $20 million in bonds to finance a new investment project. The new bonds will carry a 5% coupon rate payable semi-annually, will have a maturity of 11years,and will be priced to provide a yield to maturity (YTM)of 6.8%. Flotation costs on the new issue will be 2% after tax, and DLI's tax rate is 27%. What is DLI's current cost of debt after flotation costs?

a)3.72%

b)4.86%

c)5.07%

d)6.94%

Can you give me a detailed answer for this with breakdown?

Window Shine Corp.(WSC) expects to pay a dividend of $1.50on its common sharesat the end of this year. This amount will increase by 10% two years from now and an additional 8% three years from now. Dividends are then expected to grow at an average rate of 4% each year after Year 3. If the required rate of return on WSC's common shares is 12%, what is the current price of a common share?

a)$14.91

b)$18.65

c)$19.78

d)$20.41

Reference no: EM132585330

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