The capital structure of Index company is below Source Target market proportions ___________________________________ Long‑term debt 40% Preferred stock 10 Common stock equity 50 PREFERRED STOCK: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay an $6.00 annual dividend. The cost of issuing and selling the stock is $2.9 per share. DEBT: The firm can sell a 15 year, $1,000 par value, 11 percent bond for $900. A flotation cost of 2.5 percent of the face value. COMMON STOCK: The dividend expected to be paid at the end of the coming year is $6.07 and selling price is $50. Its dividend payments have been growing at a constant rate for the last 6 years. Six years ago, the dividend was $2.45. the cost of issuing the stock was $2.5. the firm's marginal tax rate is 35 percent. What is the cost of capital of the firm? If you are a finance manager of the company and your task is to reduce the cost of capital .In this situation how you can minimize the cost. Explain....
- The capital structure of Index company is below
Source Target market
proportions
___________________________________
Long‑term debt 40%
Common stock equity 50
PREFERRED STOCK: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay an $6.00 annual dividend. The cost of issuing and selling the stock is $2.9 per share.
DEBT: The firm can sell a 15 year, $1,000 par value, 11 percent bond for $900. A flotation cost of 2.5 percent of the face value.
COMMON STOCK: The dividend expected to be paid at the end of the coming year is $6.07 and selling price is $50. Its dividend payments have been growing at a constant rate for the last 6 years. Six years ago, the dividend was $2.45. the cost of issuing the stock was $2.5.
the firm's marginal tax rate is 35 percent. What is the cost of capital of the firm? If you are a finance manager of the company and your task is to reduce the cost of capital .In this situation how you can minimize the cost. Explain....
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