National Co.'s capital structure consists of 30% long-term liabilities, 30% preferred stock, and 40% common stock. The cost of capital for each component is shown below. Long-term liabilities Preferred stock Common stock 5% 5% 10% I-----------------

National Co.'s capital structure consists of 30% long-term liabilities, 30% preferred stock, and 40% common stock. The cost of capital for each component is shown below. Long-term liabilities Preferred stock Common stock 5% 5% 10% I-----------------

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

What is the company’s after-tax weighted average cost of capital if National Co. pays 25% taxes?

National Co.'s capital structure consists of 30% long-term liabilities, 30% preferred
stock, and 40% common stock. The cost of capital for each component is shown below.
Long-term liabilities
Preferred stock
Common stock
5%
5%
10%
I-----------------

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The company capital structure consist of debt 380000 @ 4.05%, common stock 220000@12.09% and preferred stock 400000 @ 19.50%, calculate company's weighted average cost of capital Select one: O a. 12.99% O b. 11% O c. 9.50% O d. None O e. 11.99%
The company capital structure consists of debt 150000 at 4.05%, preferred stock is 20% from debt amount at 13.30% and common stock 60000 at 19.50%, calculate company's weighted average cost of capital Select one: O a. 10.50% b. None O c. 11% d. 5.99% O e. 8.99%
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Given the following information: Percent of capital structure: Debt Preferred stock Common equity (retained earnings) Additional information: Bond coupon rate Bond yield to maturity Dividend, expected common Dividend, preferred Price, common Price, preferred Flotation cost, preferred Growth rate Corporate tax rate 13% 11% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 7.00 $ 14.00 $ 70.00 $110.00 $ 2.50 30% 10% 5 85 Calculate the Hamilton Corp's weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost %
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