1 To help finance a major expansion, a company sold a noncallable bond several years ago that now has 15 years to maturity. This bond has a 10.25% annual coupon, paid semiannually, it sells at a price of $985, and it has a par value of $1,000. If the company’s tax rate is 10%, what component cost of debt should be used in the WACC calculation?
a. 8.93%
b. 9..92%.
c. 11.02%.
d. 12.33%.
2. You were hired as a consultant to a company, whose target capital structure is 30% debt, 10% preferred, and 60% common equity. The before-tax cost of debt is 6.0%, the cost of preferred is 8.0%, and the cost of retained earnings is 12.0%. The corporate tax rate is 21%. The firm will not be issuing any new stock. What is its WACC?
a. 8.90%.
b. 9.70%.
c. 9.40%.
d. 10.0%.
A stock is selling for $50 in the market. The required rate of return is 9%. The most recent dividend paid is D0 = $2.0 and dividends are expected to grow at a constant rate g. What’s the expected dividend yield for this stock?
a. 4.00%.
b. 4.19%.
c. 5.0%.
d. 9.0%. Get Finance Help Today
What are the key elements of an essay
You may clearly understand what an essay is and have had the experience of writing a number. However, it is […]
Feb 25th, 2022
How to write a research paper fast
The day inevitably comes; you need to submit your assignment. You have been procrastinating on writing your paper until the […]
Feb 24th, 2022
220+ best humanities research paper topics
Choosing a paper topic can be a daunting task for any assignment. A student may face agony trying to come […]
Feb 24th, 2022
How to write a media analysis essay
The media is an integral part of modern society. Think of what would happen to the world if there were […]
Feb 23rd, 2022
Great tricks on how to write a hypothesis in 2022
A hypothesis is a statement that can be proven by scientific research. It proves the theory of action and reaction, […]
Feb 22nd, 2022