Problem 13-9 Preferred stock In 2021, Beta Corporation earned gross profits of $820,000. a. Suppose that Beta was financed by a combination of common stock and $1.06 million of debt. The interest rate on the debt was 11%, and the corporate tax rate in 2021 was 21%. How much profit was available for common stockholders after payment of interest and corporate taxes? b. Now suppose that instead of issuing debt, Beta was financed by a combination of common stock and $1.06 million of preferred stock. The dividend yield on the preferred was 9%, and the corporate tax rate was still 21%. Recalculate the profit available for common stockholders after payment of preferred dividends and corporate taxes. Note: Do not round intermediate calculations. Enter your answers in dollars not millions and round your answers to the nearest whole dollar amount. a. Profit available to common stockholders b. Profit available to common stockholders

Domestic

9

13_14

Pls correct and stepwise

Chapter 9 #3 Assume that a firm has earned before-tax income. The corporate tax rate is 35 percent. If the security used to finance the investment is $1,000 of 10 percent debt, the firm holding the debt (supplying the debt capital) will earn _______________after tax. If the security used to finance the investment is $1,000 of 10 percent preferred stock, the corporation holding the preferred stock (supplying the capital) will earn _______________ after tax with a 0.70 dividend received reduction. If the security used to finance the investment is $1,000 of common stock and if the entire after-tax amount of income is paid as a dividend, the corporation holding the common stock will earn _______________ after tax. The firm has earned before tax income of $153.85.

Question 8  Ch. 13. For questions 7, 8, and 9, use the following information: 7.) Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. What is the aftertax cost of debt?  Format as a percentage and round to two places past the decimal point as "X.XX" 5.53 8.) Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. Using the pretax cost of debt…