User Account

All Pages

Finance final, Finance Basics

Assignment Help:
• Company X has $100,000 face value of outstanding bonds consisting of 100 $1,000 face value bonds with a 4% annual coupon and 20 years remaining until maturity. The bonds are currently selling a price of $900 (90% of face value). A new 20 year issue could be sold for a flotation cost of 5% of face value. The company is in the 40% tax bracket (this applies to all of the questions on this page)
• Calculate the investor’s required rate of return on the bonds today
• If the investor’s required rate of return on the bond was 3%, what would be the current price of the bond
• What is the total current market value of all of the outstanding bonds?
• What annual coupon would have to be placed on the new issue in order for it to sell at par?
• Calculate the flotation cost and tax savings from the proposed new bond issue
• Calculate the cost of the new bond financing
• Company X has $25,000 of outstanding preferred stock, consisting of 250 shares, each with $100 face value and currently selling for $90 a share. The preferred stock pays an annual dividend of $4 per share. A new preferred stock issue could be sold for a flotation cost of 7% of face value.
• Calculate the investor’s required rate of return on the preferred stock today
• What annual dividend rate would have to be placed on the new issue for it to sell at par?
• Calculate the cost of the new preferred stock financing
• What is the total market value of all of the outstanding preferred stock?

• Company X has 10,000 shares of common stock outstanding that is currently selling for $60.00 a share. The company recently paid an annual dividend of $2.00 per share, and the dividend is expected to grow by 5% a year. An investment bank has advised that a new issue could be sold for a flotation cost of 8% of face value
• Calculate the dividend anticipated in the next year
• Calculate the investor’s required rate of return from the company’s common stock
• Calculate the company’s cost of a new stock issue
• Calculate the investor’s required rate of return if Company X had a Beta of 1.2, the risk-free rate is 4% and the market risk premium is 5%,
• Calculate the price of the Company’s common stock based on your answers in a) and d)
• What is the total market value of all of the outstanding common stock?

• Company X has announced that its target capital structure will consist of 30% bond financing, 10% preferred stock financing, and 60% common equity financing.
• Calculate Company X’s weighted average cost of capital (WACC) based on the target capital structure
• Calculate Company X’s weighted average cost of capital (WACC) based on company’s X market values for bonds, preferred stock, and common stock

Related Discussions:- Finance final

Gloria the Investor, Gloria the Investor Gloria is a seasoned sales manage...

Gloria the Investor Gloria is a seasoned sales manager with a very large international company. Although she has a great deal of experience with sales, she has little experience w

What do you meant by the term life insurance contract, Question 1: (a) ...

Question 1: (a) What do you meant by the term ‘Life Insurance Contract'? (b) Many people prefer to choose Single life policies compared to Joint life policies. Why is t

Banking credit, some report about credit bank

some report about credit bank

Business finance., what are the sources of business finance?

what are the sources of business finance?

Agency relationship between auditors and shareholders, Agency Relationship ...

Agency Relationship between Auditors and Shareholders Shareholders appoint auditors as per the provisions of Section 159(1)-(6) of the Companies Act. The auditors are believed

Incentive problem and consumption of perquisites, Incentive Problem and Con...

Incentive Problem and Consumption of Perquisites Incentive Problem Managers may have fixed salary and they may have no incentive to work hard and maximize shareholders weal

Calculate total number of ordinary shares, Calculate total number of ordina...

Calculate total number of ordinary shares Example Company XYZ Ltd has sold 10,000 ordinary shares of Shs.30 as partly called up plus 20,000 Shs.45 preference shares, tha

Finance applicatios and theory, Zoeckler Mowing & Landscaping''s year-end 2...

Zoeckler Mowing & Landscaping''s year-end 2012 balance sheet lists current assets of $436,500, fixed assets of $551,500, current liabilities of $417,900, and long-term debt of $317

System intergration, system integration and infrastructure development is t...

system integration and infrastructure development is the

How to make smart investment, How to make smart investment

How to make smart investment

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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