What is the weight of bond in the firm

Assignment Help Finance Basics
Reference no: EM133057243

A firm has a cost of debt of 8% a cost of equity of 11% and a cost of preferred stock of 6%. The firm has issued 98,000 shares of common stock and the market price per share is $16.50. There are 47,000 shares of preferred stock outstanding at a market price of $26.00 a share. The bond issue has a face value of $475,000 and a market quote of 102. The company's tax rate is 25% What is the weight of bond in the firm?

Reference no: EM133057243

Questions Cloud

Determining the target debt-equity ratio : Blue Angel, Inc., a private firm in the holiday gift industry, is considering a new project. The company currently has a target debt-equity ratio of .30, but th
How much can mary deposit to her tfsa in 2020 : Mary was born in 1992. She made the following deposits and withdrawals to her TFSA: Year 2009 2010 2011 2012 2013 2014 2015 2016 Withdrawal $1,000 $1,500 So $4,
Calculate the percentage of ownership in the company : Assume a venture capitalist requires a 40 percent rate of return per year. If the venture capitalist thinks that a company will be worth $50 million in 5 years,
Calculate the beta of mcdonald : How did we calculate the beta of McDonald's? Explain in detail.
What is the weight of bond in the firm : The bond issue has a face value of $475,000 and a market quote of 102. The company's tax rate is 25% What is the weight of bond in the firm?
Explain the nature of a real estate loan : Explain the nature of a real estate loan, are they safe and why are these types of loans important?
What is the value of the call option : If the stock is trading for 24 dollars, N(d1) = 0.5, N(d2) = 0.4, and the risk free rate is0.01, what is the value of the call option?
What is the irr on the investment : Using TVM functions, what is the IRR on the investment? Please break out each TVM entry you use to solve.
What is the expected npv for a project : What is the expected NPV for a project with the following scenarios?

Reviews

Write a Review

Finance Basics Questions & Answers

  How the structure of an organisation customer service

Explain how the structure of an organisation's customer service department relates to customer satisfaction on products and services.

  What are the process of servant leadership

In Business leadership, what are the process of servant leadership; democratic leadership; and enlightened leadership?

  Effective interest rate per year

A company has a limit of NOK 1,000,000 on its overdraft facility. Interest is charged to the overdraft account every quarter. They pay 6% interest p.a. and 0.15

  Current yield for annual payments

Heath Food Corporation's bonds have 13 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%.

  Select a funding agency and a funding instrument

An employer must select a funding agency and a funding instrument when a pension plan is established.a. What is a funding agency?

  Calculating ratio analysis and discounted interest rates

Define the quick ratio (i.e., acid-test ratio) and return on equity ratio, and state what these financial ratios measure.

  What the driving forces are of ford motor comapny usa

Are those that have the biggest influence on what kinds of changes will take place in the industry's structure and competitive environment.

  Yield to maturity on a two-year zero-coupon bond

The yield to maturity on a two-year zero-coupon bond is 10%. Answer the following questions (use annual compounding):

  Should you invest in timco

Timco is twice as risky as the market. The market is expected to earn 10%. The risk free rate is 3%. You think Timco can earn 15%. Should you invest in Timco?

  What is its beta

In the event that the obliged profit for a stock is 18 percent, what is its beta

  What is the probility that the return on the stock

What is the probility that the return on the stock in any one year will be lower than -9.7%

  Determining the maximum interest rate

An ARM loan with a teaser start rate of 1.5% for the first year, an index of one-year LIBOR, a margin of 2.0%, and periodic and lifetime interest rate

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