1. What is Rollins’ component cost of debt? a. 10.0% b. 9.1% c. 8.6% d. 8.0% e. 7.2% 2. What is Rollins’ cost of preferred stock? a. 10.0% b. 11.0% c. 12.0% d. 12.6% e. 13.2% 3. What is Rollins’ cost of retained earnings using the CAPM approach? a. 13.6% b. 14.1% c. 16.0% d. 16.6% e. 16.9%
Rollins Corporation has a target capital structure consisting of 20% debt, 20%
Cost of debt
1. What is Rollins’ component cost of debt? a. 10.0% b. 9.1% c. 8.6% d. 8.0% e. 7.2%
2. What is Rollins’ cost of preferred stock? a. 10.0% b. 11.0% c. 12.0% d. 12.6% e. 13.2%
3. What is Rollins’ cost of retained earnings using the
4. What is the firm’s cost of retained earnings using the DCF approach? a. 13.6% b. 14.1% c. 16.0%
5. What is Rollins’ cost of retained earnings using the bond-yield-plus-risk-premium approach? a. 13.6% b. 14.1% c. 16.0% d. 16.6% e. 16.9%
6. What is Rollins’ WACC, if the firm has insufficient retained earnings to fund the equity portion of its capital budget? a. 13.6% b. 14.1% c. 16.0% d. 16.6% e. 16.9%
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