Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Levy's company has the following information about its capital structures:

 Debt - 1,500, 5 percent coupon bonds outstanding, $1,000 par value, 7 years to maturity, selling for 80 percent of par, the bonds make semi-annual payments

  • Common Stock - 100,000 shares outstanding, selling for $45 per share; the beta is 0.80
  • Preferred Stock - 25,000 shares of 6 percent preferred stock outstanding, currently selling for $150 per share
  • Market Information - 6 percent market risk premium and 4 percent risk-free rate.

Calculate the following if the company has a tax rate of 36 percent:

Total Market Value for the Firm , After-tax cost of Debt, Cost of Equity , Cost of Preferred Stock, Weighted Average Cost of Capital.

Please note that the total market value, After-tax cost of Debt, Cost of Equity and Cost of Preferred Stock should all be calculated in dollar value and NOT percentages.

do not use excel formulas. show all workings

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