The BEAR Company has 1,500 bonds outstanding thathave a market price of $990 each. floatation cost is 0.022the bond pays Coupon of 0.035 semiannually.for 15years. The company also has 5,000 shares of preferredstock at a market price of $37 and dividends 1.3 each. Thecommon stock is priced at $26 a share it is undervalued by$2 and there are 36,000 shares outstanding, the stock isexpected to pay $2 and will continue to grow at a rate Of0.04 .TAXES ARE 0.38what is the cost of debt after tax?what is the cost of PSwhat is the cost of common stock?what is the weight of the bondarch what is the cost of debt after tax?0.0143what is the cost of PSwhat is the cost of common stock?what is the weight of the bondwhat is the weight of the stockwhat is the weight of preferred stockwhat is the WACC?

We need to calculate yield to maturity using excel. Yield to maturity is considered as actual cost…

he BEAR Company has 1,500 bonds outstanding that nave a market price of $990 each. floatation cost is 0.022 he bond pays Coupon of 0.035 semiannually for 15 years. The company also has 5,000 shares of preferred tock at a market price of $37 and dividends 1.3 each. Th Common stock is priced at $26 a share it is undervalued b $2 and there are 36,000 shares outstanding., the stock is

he BEAR Company has 1,500 bonds outstanding that nave a market price of $990 each. floatation cost is 0.022 he bond pays Coupon of 0.035 semiannually for 15 years. The company also has 5,000 shares of preferred tock at a market price of $37 and dividends 1.3 each. Th Common stock is priced at $26 a share it is undervalued b $2 and there are 36,000 shares outstanding., the stock is

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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Evenflow Corp has 9 million shares of common stock outstanding, 250,000 shares outstanding of preferred stocks, and 8,000 semiannual bonds outstanding. 4. There are 8,000 semiannual bonds paying a 6.5% coupon with 20 years to maturity and currently selling for $920 per $1000 face value. b. The preferred stocks are selling for $93 paying $5constant dividends. The current market price of the stock is $57 and the beta is 1.05. The market risk premium is 8% and 4.5% risk-free rate. а. с. What is the weighted average cost of capital (WACC) if the marginal tax rate is 35%? If the cash flow from assets are -$135,000 in year 0, $46,000 in year 1, $57,000 in year 2, and $62,000 in year 3, should the firm accept or reject the project? The floatation costs for issuing debt, preferred stock and common stock are 5%, 3% and 7%, respectively. The firm plans to maintain the same capital structure. Considering floatation costs, should the project still be accepted? Why or why not? The firm is embarking…
Filer Manufacturing has 4,766,598 shares of common stock outstanding. The current share price is $48.72, and the book value per share is $3.5. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $67,516,398, has a 0.06 coupon, matures in 10 years and sells for 98 percent of par. The second issue has a face value of $66,573,884, has a 0.05 coupon, matures in 8 years, and sells for 95 percent of par. What is Filer's weight of debt on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345)
Santa Claus Enterprises has 174,000 shares of common stock outstanding at a current price of $46 a share. The firm also has two bond issues outstanding. The first bond issue has a total face value of $250,000, pays 7.7 percent interest annually, and currently sells for 102.5 percent of face value. The second bond issue consists of 5,000 bonds that are selling for $993 each. These bonds pay 6.5 percent interest annually and mature in eight years. The tax rate is 34 percent. What is the capital structure weight of the firm's debt?
Solo Inc. has 70,000 bonds that are currently priced at face ralue, ($1,000). The bonds have a coupon rate of 7.0%. Solo also has 550,000 shares of 7% preferred stock (face value $100 per share), along with 2.0 million shares of common stock outstanding. The equity has a beta of 1.25 and is selling for $40 per share. The preferred stock is selling for $60 per shares. The U.S. Treasury bill is yielding 3.0% and the market return is 11.0%. If the tax rate is 35%, what is the firm's applicable discount rate? (Show your work)
Lime inc. is currently keeping a constant debt policy with a perpetual debt amount of 100,000,00, interest rate of 4.35%, value of levered assets of 243,000,000 and an expected return on levered equity equal to 12.35%. The company has 500,000 shares outstanding. The company announces a right issuance: current shareholders can subscribe three new shares for every two shares they own at an issuance price of 213. Assuming a Lime’s shareholder has a right for each new share issued, what is the value of a right?
Filer Manufacturing has 6,820,579 shares of common stock outstanding. The current share price is $65.75, and the book value per share is $5.43. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $45,114,745, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $48,970,825, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $2.33 and the dividend growth rate is 0.05. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 0.28. What is Filer's aftertax cost of debt? Enter the answer with 4 decimals (e.g. 0.2345)
The BEAR Company has 2000 bonds outstanding that have a market price of $1195 each and a face value of $1000. floatation cost is 0.015 the bond pays coupon of 0.055 quarterly for 12 years. The company also has 6,000 shares of preferred stock at a market price of $38 and dividends 1.5 each par value 20 dollars . The common stock is priced at $28 a share it is undervalued by $1.5 and there are 60000 shares outstanding, par value is 5 dollars the stock is pays $2.6 and will continue to grow at a rate of 0.07 . TAXES ARE 0.38 what is the cost of debt after tax? Answer for part 1 what is the cost of PS Answer for part 2 what is the cost of common stock? Answer for part 3 what is the weight of the bond according to book value method Answer for part 4 what is the weight of the stock according to book value method Answer for part 5 what is the weight of preferred stock according to book value method Answer for part 6 what is the WACC? use the book value method
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Bombay Inc has 8.5 million shares of common stock outstanding, 250,000shares of 5% preferred stock outstanding, and 135,000 7.5% semi-annualbonds outstanding, par value $1000 EACH. The common stock currently sellsfor $34 per share and has a beta of 1.25, the preferred stock currently sells for$91 per share, and the bonds have 15 years to maturity and sell for 114% ofpar. The market risk premium is 7.5%, T-bills are yielding 4%, and thecompany’s tax rate is 35%.a) Calculate the firm’s market value capital structure.b) Calculate the company WACCc) If Bombay Inc generates a 7.5% with this capital, is Bombay Incdestroying or adding value discuss.
Lingenburger Cheese Corporation has 6.4 million shares of common stock outstanding. 320,000 shares of 4.65 percent preferred stock outstanding, par value of $100, and 73,000 5.6 percent semiannual bonds outstanding, par value $2,000 each. The common stock currently sells for $74.25 per share and has a beta of 1.14, the preferred stock currently sells for $101.60 per share, and the bonds have 23 years to maturity and sell for 96.1 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 3.4 percent, and the firm's tax rate is 25 percent. What is the firm's market value capital structure? Note: Do not round Intermediate calculations and round your answers to 4 decimal places, e.g., .1616. Market value weight of debt Market value weight of preferred stock Market value weight of equity What is the firm's cost of each form of financing? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Aftertax cost…
LucaCorp.'s 4.3% bonds are currently quoted as trading at "92." There are 10,000 bonds outstanding. The firm's marginal tax rate is 30%. The firm's stock is trading for $59 per share, with 1 million shares outstanding. The weight of the debt, WD, is ____%. Do not round any intermediate work, but round your final answer to 2 decimal places (example: enter 12.34 for 12.34%). Do not enter the % sign.
1) KAPITAL Company has 50,000 bonds outstanding. The bonds are selling at 96% of face value, ($1,000) have a 7% coupon rate, pay interest semi-annually. There are 100,000 shares of $6.30 (dividend) preferred stock outstanding with a current market price of $66 a share. In addition, there are 1.15 million shares of common stock outstanding with a market price of $77 a share and a beta of 0.80. The common stock just paid $3.46 in dividends and it is expected to grow by 3% annually. The firm's marginal tax rate is 35%. The stock market return is 10% and the Treasury bill rate is 4%. Bond maturity is 8% (a) What is the cost of equity based on the dividend growth model? What is the cost of equity based on the security market line? Explain any difference with (a). What is the cost of financing using preferred stock? What is the after-tax cost of debt financing? What is the weighted average cost of capital, using the cost of equity-based (a)? Interpret your answer. Assume the company…

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