Bond coupon rate 11% Bond yield to maturity 9% Dividend, expected common $ 5.00 Dividend, preferred $ 12.00 Price, common $ 60.00 Price, preferred $ 106.00 Flotation cost, preferred $ 4.50
Bond coupon rate 11% Bond yield to maturity 9% Dividend, expected common $ 5.00 Dividend, preferred $ 12.00 Price, common $ 60.00 Price, preferred $ 106.00 Flotation cost, preferred $ 4.50
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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Question
Given the following information:
Percent of capital structure:
| Debt | 35% |
|---|---|
| 20 | |
| Common equity ( |
45 |
Additional information:
| Bond coupon rate | 11% |
|---|---|
| Bond yield to maturity | 9% |
| Dividend, expected common | $ 5.00 |
| Dividend, preferred | $ 12.00 |
| Price, common | $ 60.00 |
| Price, preferred | $ 106.00 |
| Flotation cost, preferred | $ 4.50 |
| Growth rate | 6% |
| Corporate tax rate | 25% |
Calculate the Hamilton Corporation's weighted cost of each source of capital and the weighted average cost of capital.
Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.
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