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What is the market value of the debt

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Reference no: EM133060868

Consider the following company,

Book Value of Debt

$50 million

YTM

10%

Coupon

7%

Coupon Payments

semi-annually

Years

20

Corporate Tax Rate

33%

# of Preferred Shares

2 million

Price of Preferred Share

$25

Dividend per Preferred Shares

$1.33

# of Common Shares

9.5 million

Price of Common Share

$19

β  of Common Stock

1.3

Risk-Free Rate

4%

Market Return

10%

a. What is the market value of the debt? Enter your answer in terms of millions and rounded to 2 DECIMAL PLACES.

b. What is the rate of return on the preferred stock? Enter you answer as a percentage and rounded to 2 DECIMAL PLACES. Do not include the percentage sign in your answers.

c. What is the market value of the preferred stock? Enter your answer in terms of millions.

d. What is the rate of return of the equity? Enter your answer as a percentage. Do not include the percentage sign in your answers.

e. What is the market value of the equity? Enter your answer in terms of millions.

Reference no: EM133060868

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