13:08O 62%attachme.(518).pdf241. You have the following dataDebt- 50000 bonds with 5 % coupon rate. Debt is repayable annually..15 yrs to maturity and is sellingat $1050 per bond.Common stock: 1000 000 shares of common stock outstanding selling at $65 [er share and has abeta of 1.1Preferred stock: 150000 preferred shares outstanding currently trading @ $90 per share with anannual dividend of $6.50.mkt risk premium is 7% if rf =2.5%Tax =35%Determinea.cost of common stockb. cost of preffered stockc. cost of debt before taxd.after tax kde. WACC2. Edgars is planning to issue new debt at an interest rate of 8%. Edgars is in the 40% marginal taxrate. What is the company's cost of debt capital3. Suppose the Edgars Share sells for $21 and next year dividend is expected to be $1. Edgars has areturn on equity (ROE) of 12% and they are expected to pay out 40% of their earnings. What is thecost of the retained equity?4. Suppose the Edgars Share sells for $21 and next year dividend is expected to be $1. Edgars has areturn on equity (ROE) of 12% and they are expected to pay out 40% of their earnings. Assuming theprevious growth rate of 7, 2% and that Edgars has a floatation cost of 10%. Calculate the new cost ofMobile ViewTools

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Answered: 1. You have the following data Debt-…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 10.2 percent. Interest payments are $51.00 and are paid semiannually. The bonds have a current market value of $1,123 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.79 dividend last year. The firm's dividends are expected to continue to grow at 7.3 percent per year, forever. The price of the firm's common stock is now $27.87. c. A preferred stock that sells for $132, pays a dividend of 8.7 percent, and has a $100 par value. d. A bond selling to yield 11.3 percent where the firm's tax rate is 34 percent. Question content area bottom Part 1 a. The after-tax cost of debt is_____%
The 5 percent coupon, $1,000 face value bonds of Grand Canyon Inc. are currently selling at $880. These bonds have 6 years left until maturity. What is the current yield? 7.16 percent 6.00 percent 5.68 percent 4.19 percent
An investor with a bond of par value $1,000 paying 5% coupon semi-annually will receive ________. a. $100 annually b. $25 semi-annually c. $25 annually d. None of the above.
1. Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually. Calculate the current yield and the yield to maturity 1. Assume a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent what is the value of the bond? 2. What would be the value of the bond described in part bif, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now have a discount or a premium bond? 3. What would happen to the bonds' value if inflation fell, by 3 %? Would we now have a premium or a discount bond?
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Given the following information of Electric Transport Debt value: $75,000. Debt information: 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for $1,030, the bonds make annual payments Equity value: $175,000. Equity information: Beta is 1.21, Market return is 13.1%, and Risk-free rate is 5.1% Assume the company's tax rate is 40%. Calculate the WACC for this firm. 11.80% 12.78% 7.48% 9.19%
You recently purchased a 30 year 6.5% coupon, Microsoft corporate bond for $1075. In 15 years the bond is callable at $1,200. What is the bond's current yield? 0.65% 07.1% - 6.0 %
PGT's P1,000 par value bonds currently sell for P798.50. The coupon rate is 10% paid quarterly. If the bonds have 5 yrs before maturity, what is the approximate YTM? answer with full solution
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Q1. A company issued 20-year bonds with par value $1,000 two years ago at a coupon rate of 5 percent. The bonds make semiannual coupon payments. The yield to maturity on this bond is 4 percent. Calculate the current yield of the bond. Q2. A company has an odd dividend policy. The company will pay a dividend of $3 per share next year and has announced that it will increase the dividend by $5 per share for each of the subsequent four years and then maintains a constant 2% growth rate. If you require a return of 8 percent on the company’s stock. A. How much will you pay for a share today?B. At the price you are willing to pay for, what is the dividend yield in the first year? Q3. A project has the following cash flow with a discount rate of 12%: Annual cash flows: Year 0 Year 1 Year 2 Year 3 Year 4 $ -520,000 $ 170,000 $ 210,000 $ 225,000 $ 195,000 $520,000 is used in purchasing an equipment for the project only. Compute the following: Payback period; Discounted Payback…
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