finance Chapter 10 - Problem A Part A long term debt /...

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Yeild to Maturity of a coupon bond years left to maturity nper 9 annual interest payment Pmt 90 Present Vale PV -1,066.90 Future Value(Future) FV 1000 type 0 Required Rate of Return Rate 7.93% After - tax cost of debt k(1-Tc) = 7.93% (1-0.32) = 5.39 rror * 1- mtaxrate B Do (1+g) $1.20 (1 +0.08) = $1.30  Pcs (1 - flotation cost) 23(1-.07) = $21.39  1.30 / 21.39 + 0.08 = 14.08 C d1/pcs + g 3.50/43 + .09 =  17.14% D preferred stock dividend / NPps Pps (1 - flotation cost) 172 (1-0.15)  146.2 0.09 x $100 / 146.20 6.16% 163(1-0.14) 140.18 0.11 x $140 / 140.18
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Unformatted text preview: Problem A Part A long term debt / total assets 10,880,000/ 30, 844,000 35.27% Common equity / total assets 19,964,000 / 30, 844,000 64.73% After tax cost of debt .08(1-.36) 5.12% Weighted Cost of capitals (.0512x0.3527) + (.17 x 0.6473) 12.81% Part B Stock price times 1.5 $19,964,000 x 1.5 / $19,964,000 x 1.5 + 1 10880000 / (19,964,000 x 1.5 + 10,880,00 Weighted average cost of capital (0.0512 x 0.26650) + (0.15 x 0.73350) 10,880,000) 73.35% 00) 26.65% 12.37%...
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This note was uploaded on 12/05/2010 for the course BUS BUS taught by Professor Fox during the Fall '10 term at University of Baltimore.

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finance Chapter 10 - Problem A Part A long term debt /...

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