Use the following data for the next 5 questions: Debt Common Stock Preferred Stock Market 63,000 bonds with a 5.0% coupon rate, payable annually, 15 years to maturity, selling at $1,050 per bond. 567,000 shares of common stock outstanding. The stock sells for a price of $87 per share and has a beta of 1.98. 250,000 preferred shares outstanding, currently trading at $63.11 per share; with an annual dividend payment of $8.54, The market risk premium is 16% and the risk free rate is 6% Tax Rate 21% What is the before tax cost of debt (Ra)? (Answer as a percentage and round to 2 decimals) O a. 2.50 % O b. 6.91 % O c. 7.50% O d. 4.53 % e. 1.96 % # 3 $ 4 %6 5 47 & hp 7 8

Raghubhai

Consider the following book value balance sheet of ABC, in which all figures are in million dollars. The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are 1 million common shares outstanding.   Assets   Liabilities and Net Worth   Cash and short-term securities $1 Bonds with coupon rate of 8% paid annualy, maturity of 10 years and the current yield to maturity of 9% $10 Account receivables  $3 Preferred stock (par value $10 per share) $2 Inventories $7 Common stock $10 Plant and equipment $21 Retained earnings $10 Total $32   $32     a) What is the capital structure of the firm based on market values?   b) The preferred stock pays a dividend of $2 per share, the beta of the common stock is 1.5, the market risk premium is 7%, the risk-free rate is 4%, and the firm’s tax rate is 40%. ABC’s bonds have coupon rate of 6%, and currently are trading at par. What is the firm’s weighted average cost of capital (WACC)?…

A corporate bond sells for $990 currently. It has a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their capital gains yield? 8.11% 0.14% 9.47% 0.13%

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Graphical Designs is offering 15-15 preferred stock. The stock will pay an annual dividend of $15 with the first dividend payment occurring 15 years from today. The required return on this stock is 4 45 percent What is the price of the stock today? Mutiple Choice O O O $10324 $33708

5. A securities firm has provided the balance sheet below. Assets ($ millions) $ 34 Liabilities and Equity ($ millions) Short-term funding Cash $ 27 Debt securities 175 Bonds 300 Equity securities 400 Debentures 197 Other assets 12 Equity 97 Total Assets $ 621 Total Liabilities and Equity $ 621 The debt securities have an annual 7.25% coupon rate, 22 years to maturity and a yield to maturity of 6.75%. The market value of the equity securities and the other assets is equal to their book value. The firm has 500,000 shares outstanding and the price per share is $35.67. a. Calculate the firm's aggregate indebtedness to net capital ratio. b. Calculate the firm's highly liquid assets to total liabilities ratio. Based on the firm's ratios from a and b, is it in compliance with Rule 15C 3-1? Why or why not? C.

*assume all bonds make semiannual coupon payment*

Assume that Almond Milk Company has a $1,000 face value bond with a stated coupon rate of 8.18 percent that is convertible into its common stock at $35.77. The bond is selling at $1,096.27 in the market. The common stock is selling for $33.84 and pays a dividend of 0.62 per share. Calculate the payback premium period.

A $1,000 face value, 6.4% coupon bond pays interest semi-annually and matures in ten years.  It has a yield-to-maturity of 7.1325%.  The bond's price is closest to  $920 $1,203 $1,061 $948   2.  Pilgrim Corp. stock currently sells for $25 per share?  The annual dividend payment is $1.00 per share and earnings per share are $3.00.  What is the dividend payout ratio?