Calculate the cost of capital for a bond whose yield to maturity is 10% and the firm's tax rate of 34% a. 34% b. 10% c. 11% d. 6.6%
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Calculate the cost of capital for a bond whose yield to maturity is 10% and the firm's tax rate of 34%
a. 34%
b. 10%
c. 11%
d. 6.6%
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- Crystal Company summarized the following transactions pertaining to its patent. 2012 Spent P250, 000 for the research and development of the patent 2013 Jan. 1 Paid P60, 000 to apply for and obtain right to the patent. The useful life of the patent is 10 years. 2014 Jan. 1 Purchased for P600, 000 a new patent that is expected to prolong the life of the original patent by 6 years. 2015 Dec. 31 A competitor obtained rights to a patent which rendered the entity’s patent obsolete Required: Prepare all entries relating to the patent from 2012 to 2015. rules of answering the problem3. BC Limited has a nominal cost of capital of 12.65% per annum. The real interest rate is 8.0% per annum. What is the inflation rate? A 5.45% B 7.0% C 6.0% D 9.45%Consider the following average annual returns: Average Return 23.5% 13.1% 7.5% 6.8% 4% Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 1.8% OB. 0% OC. 7% OD. 3.5%
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- 14-What is the weighted average cost of capital for the firm with equal weights of debt and equity financing? Assuming that the cost of equity capital at 15%, before tax cost of debt at 12%, and a 35% tax rate. a. 8.775% b. 13.50% c. 9.60% d. 11.40%The Five and Dime Store has a cost of equity of 14.8 percent, a pretax cost of debt of 6.7 percent, and a tax rate of 21 percent. What is the firm's weighted average cost of capital if the debt-equity ratio is 467 Multiple Choice O O 10.10% 11.80% 11.53% 13.49% 14.93%F1
- K The outstanding debt of Berstin Corp. has eight years to maturity, a current yield of 9%, and a price of $80. What is the pretax cost of debt if the tax rate is 30%. A. 7.5% B. 10.8 % OC. 6.5 % OD. more information neededTable 9.1 A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Source of Capital Long-term debt Preferred stock Common stock equity Target Market Proportions OA. 8.13 percent OB. 4.67 percent OC. 8 percent O D. 3.25 percent 20% 10 70 Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $960. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was $1.50. It is expected that to sell, a new…Dog