Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
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,
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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