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% O b. None с. 11% d. 5.99% O e. 8.99%

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% O b. None с. 11% d. 5.99% O e. 8.99%

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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2. The following capital structure and cost of capital are given for MR Corporation. Cost (%) 5.14 13.40 17.11 16.00 Mortgage Bonds ($1,000 par) Preferred Stock ($100 par) Common Stock ($40 par) Retained Earnings $20,000,000 5,000,000 20,000,000 5,000,000 (a) Compute the Weight Average Cost of Capital considering all four sources of funds. Present your answer in tabular form. (b) Illustrate how you can improve the firm's capital structure such that the overall cost of capital is minimized.
1 Following is the Balance sheet of Jay Limited: Liabilities Equity Shares of Rs. 10 each Retained Earnings } VESHUR 6% Preference Share of Rs.10 each General Reserve Debenture Redemption Fund 5% Debentures Sundry Creditors Total Liabilities Amoun Required: Calculate value per share by using following 1. Yield Method 2. Net Assets Method t 300,000 200000 Assets Fixed Assets Allowances for Depreciation 21 13303 90,000 880,000 200,000 Current assets 5,000 Preliminary Expenses Unwritten Off Discount 25,000 60,000 Amoun t 600,000 (75,000) 340,000 10,000 5,000 Total Assets Current Assets include investments of Rs.50,000 market price of which is Rs.90,000. Debtors included in current assets are doubtful to the extent of Rs.25,000 for which no provision has been made so far. Debenture interest owes for two years and preference dividends are in arrear for two years. Earnings before tax is Rs.280,000 and Tax rate is 35%. The normal rate of dividend is 20%. 880,000
Compute Proprietary Ratio From the following Particulars $ Equity Share Capital 5,00,000 Preference Share Capital 2,70,000 Reserves and Surplus 65,000 Trade Payables 1,10,000 Fixed Assets 7,00,000 Non-Current Investments 2,45,000 Current Assets 3,00,000 Debentures 3,00,000
Computer for: Equity value and enterprise value
In the Du Pont method of analysis the two key drivers of return on equity are: a) Profit margin and return on assets b) Return on assets and the financing plan c) Profit margin and the financing plan In trying to measure a company's effectiveness in earning an adequate return on sales we would use which groups of ratios? a) Profitability ratios b) Asset utilization ratios c) Liquidity ratios
Hewlard Pocket's market value balance sheet is given. Assets Liabilities and Shareholders' Equity A. Original balance sheet Cash $ 150,000 Debt Other assets 950,000 Equity 1,100,000 Value of firm $1,100,000 Value of firm $1,100,000 Shares outstanding Price per share 100,000 $1,100,000 / 100,000 = $11 %D Pocket needs to hold on to $76,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $1.90 per share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued: a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the company? (Enter your answers in whole dollars, not in millions.) c. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) d.…
A firm with sales of $500,000, net profits after taxes of $20,000, total liabilities of $200,000, and stockholders’ equity of $100,000 will have a return on equity of Select one: a. 5% b. 40% c. 20% d. 10%
Assume a capital structure where stock is 50% and costs 14%, bonds are 40% and cost 8% and preferred is 10% and costs 11% what is the weighted average cost of capital when taxes are 25%___________?
The company capital structure consist of debt 340000 @ 4.05%, common stock 40% of preferred stock @ 9.09% and preferred stock 400000 @ 19.50%, calculate company’s weighted average cost of capital. Select one: a. 12.50% b. 11.79% c. 14.98% d. None of the option e. 13.15%
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Given the following information: Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate. Dividend, preferred $ 5.00 Dividend, expected common $ 5.50 Price, preferred $101.00 Growth rate Bond yield. 34% 4% 5% Flotation cost, preferred $5.20 Price, common $ 74.00 Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital 20% 70 10. Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Notice that this problem asks for the weighted costs. These are the unweighted costs times the weights. Like this: (ka)(wa) weighted cost of debt. Weighted Cost % 0.00%
Problem 1 The CCC Corporation made available the following data as requested: Total interest payments on bonds payable P60,000 Preferred stock dividends 20,000 Common Stock dividends 24,000 Annual growth on common stock dividend 2% Market Values of: Bonds Payable P400,000 Common Stock 300,000 Preferred…

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