In the calculation of the weighted average cost of capital (WACC) Holden Manufacturer has requested that you calculate the return on its preference shares. Holdens Preference Shares current market price is $95 and are 13.8% $88. What is the required return on one of Holdens preference shares?
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In the calculation of the weighted average cost of capital (WACC) Holden Manufacturer has requested that you calculate the return on its
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- Determining the Cost of Capital: Cost of Preferred Stock The cost of preferred stock, rps, used in the weighted average cost of capital equation is calculated as the preferred dividend, Dps, divided by the current price of the preferred stock, Pps. tax adjustment is made when calculating rps because preferred dividends tax deductible; so tax savings are associated with preferred stock. Quantitative Problem: Barton Industries can issue perpetual preferred stock at a price of $58 per share. The stock would pay a constant annual dividend of $3.40 per share. If the firm's marginal tax rate is 40%, what is the company's cost of preferred stock? Round your answer to 2 decimal places. %Eaton Electronic Company's treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf Km = 8% = 6% = В D₁ = $0.60 Po = $20 8 = 5% = 1.8 a. Compute K; (required rate of return on common equity based on the capital asset pricing model). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Ki 0.10% b. Compute Ke (required rate of return on common equity based on the dividend valuation model). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Ke %To help them estimate the company's cost of capital, Smithco has hired you as a consultant. You have been provided with the following data about the company's stock: D1 $1.45; PO = $25; and g = 6.50% (constant). What is the cost of common from issuing new stock, assuming the flotation cost is 10% of the stock price? = 13.59% 11.10% 12.94% 11.68% 12.30%
- Determine the cost of common stock (equity). The T-Bill rate is 5.2%. The Market Return is 12.7%. What is the company's cost of equity capital if the company has a beta of 1.27? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %A) The factors on which capital structure is dependent on Select one: a. Government Policy b. Cost of capital c. Requirement of investors d. All the options B) If Dhofar Popcorn is issuing preferred stock at OMR 95 per share, with a stated dividend of OMR 15, and a flotation cost of 2.15%, then what is the cost of preferred stock? Select one: a. 15.13% b. 10% c. 16.13% d. 15% e. NoneYour opinion on the investor information ? Chipotle Investor information: Stock Price as of 12/31/19 = $837.11 Beta as of 12/31/19 = 1.31 P/E ratio as of 12/31/19 = 76.31 Price to Book as of 12/31/19 = 14.32 Cost of Capital “WACC" = 8.5% %3|
- You are thinking about investing in either X corp, or Y corp. Based on the following market measures, which company could be the best option based on possible return of investment? x y Price/Earnings Ratio 10.39 12.27 Earnings per Common Share 3.5 5.4 Divident Payout .464 .320A company hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $2.45; P0 = $28.96; and g = 4.06% (constant). What is the cost of equity from retained earnings? Do not round your intermediate calculations. Express your answer as a percent rounded to two decimal places. (For example, 4.567% should be entered as 4.57)You were recently hired by MSS company to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 = $95.00; g = 6.00% (constant); and F = 7.00%. What is the cost of equity raised by selling new common stock? 7.08% 7.98% 8.18% 8.29% 7.57%
- What is the formula for Price to Book Value ( MV/BV) ratio ? If Current Price = 126, Total Equity = 20.000.000E , and number of shares =2.000.000 %3D compute the P/ BV and interpret it.Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM =5.20%; and b = 0.70. Based on the CAPM approach, what is the cost of equity from retained earnings? O a. 10.00% O b. 8.07% O c. 9.30% O d. 7.74% O e. 6.51%Identify which company’s shares you would recommend as the better investment. Provide explanations. Liquidity Panda Koala Working capital 94,100 144,750 Current ratio 2.53 2.55 Quick/acid-test ratio 1.08 1.06 Solvency Panda Koala Debt ratio 0.32 0.36 Debt-to-equity ratio 0.47 0.56 Time interest earned 23.41times 19.05times Efficiency Panda Koala Accounts (and notes) receivable turnover 20.18times 14.82times Days' sales in receivables (average collection period) 22days 27days Inventory turnover 7.70times 4.91times Days' sales in inventory 57days 82days Total asset turnover 1.83times 1.90times Profitability Panda Koala Gross profit margin 29.98 %…
