FIN500 Case _2 Assignment Summer 2010-Online

FIN500 Case _2 Assignment Summer 2010-Online - SOUTHERN NEW...

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SOUTHERN NEW HAMPSHIRE UNIVERSITY School of Business Summer Term, 2010—SNHU Online FIN500: Case #2 Assignment INSTRUCTOR: Dr. Gary P. Tripp INSTRUCTIONS FOR CASE (PROBLEM SET) #2: Your second case assignment (graded problem set) deals with the topics surrounding cost of capital as discussed in Chapter 10 of our text. Please read the case questions through and give some thought to your answers before you begin your report. Answer all questions presented below, and, as with Case #1, your report should be well-organized and independently prepared. The case report/problem set is due to be uploaded into the digital dropbox by the end of Week #10, or Saturday, August 21 (any time that day is fine). Good luck! 1. Hettenhouse Company’s perpetual preferred stock sells for $102.50 per share, and it pays a $9.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? 2. Assume that you are a consultant to Magee Inc., and you have been provided with the following data: r RF = 4.00%; r MKT = 14.00%; and β = 1.15. What is the cost of equity from retained earnings based on the CAPM approach? 3.
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This note was uploaded on 08/14/2010 for the course FIN FIN-500-X4 taught by Professor Tripp during the Summer '10 term at Southern New Hampshire University.

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FIN500 Case _2 Assignment Summer 2010-Online - SOUTHERN NEW...

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