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Unformatted text preview: = 46.96 Preferred Stock The dollar dividend amount = 14% x $70 = $9.80 Kp= $9.80/ $65 = 15.08% b. break point of retained earnings $1,500,000 / .60 = $2,500,000 c. WACC below = (.30x.0571) + (.10x.1508) + (.60x .19) = 14.62% WACC above = (.30x.0571) + (.10x.1508) + (.60x .2167) = 16.22% 4. Answer KEY Missing answer -4 5. Projects C, D, B, F, and E should be accepted, because each has an IRR greater than the WACC. These projects will require $2,400,000 in new financing. (answer key missing answer -2) GRADE 28/34...
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- Fall '08
- Finance, new common stock, Chris Bergman Principles