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Organic Produce Corporation has 8 million shares of common stock outstanding, 550,000 shares of 7 percent preferred stock outstanding, and 180,000 of 8.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $64.50 per share and has a beta of 1.25, the preferred stock currently sells for $107.50 per share, and the bonds have 15 years to maturity and sell for 93.5 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 5.5 percent, and the firm’s tax rate is 34 percent. What is the firms cost of each form of financing? Round answer to two decimals.
Railway Cabooses just paid its annual dividend of $2.90 per share. The company has been reducing the dividends by 11.9 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 13 pe..
Company YUM has 15 million shares outstanding with a market price of $20/per share. The Company YUM has $25million in extra cash (short-term investments) that it plans to use in a stock repurchase. Company YUM has no other financial investments or an..
The managers of United Medtronics are evaluating the following four projects for the coming budget period. The firm's corporate cost of capital is 14 percent. Project Cost IRR. What is the firm's optimal capital budget? Return to the original assumpt..
Robinson's has 45,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $56 a share. The balance sheet shows $45,000 in the common stock account, $470,000 in the paid in surplus account, and $440,000 in the retaine..
An investment project costs $12,000 and has annual cash flows of $3,100 for six years. Required : (a) What is the discounted payback period if the discount rate is zero percent? (b) What is the discounted payback period if the discount rate is 5 perc..
Bayou Okra Farms just paid a dividend of $3.35 on its stock. The growth rate in dividends is expected to be a constant 4 percent per year indefinitely. Investors require a return of 16 percent for the first three years, a return of 14 percent for the..
Jackson Central has a 6-year, 8% annual coupon bond with a $1,000 par value. Earls Enterprises has a 12-year, 8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. Which of these two bonds should you buy ..
An alternative has a discounted project cost of $4,185,000 with no salvage value. The estimate was in constant year dollars and the discounting used mid-year factors. While the period of analysis is 5 years, the alternative only provides benefits for..
Rocky Mountain Lumber, Inc., is considering purchasing a new wood saw that costs $50,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per yea..
Your client is a biochemist who has discovered a technique to create a new biofuel. He estimates it will take him 2 years to make it economically feasible at a cost of $2,000,000. Assume that loan is set up as interest-only (meaning any accrued inter..
You are given the balance sheet and sales information for Hoffmeister Industries: Cash ? Accounts payable? Accounts receivable? Long-term debt 120,000 Inventories ? Common stock ? Fixed assets ? Retained earnings 195,000 Total assets $600,000 Total l..
Outline the development and current status of the marketing research function. What are the differences between full-service and limited-service research suppliers?
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