hw 14 problems 1,6,7,8

# hw 14 problems 1,6,7,8 - The Down and Out Co just issued a...

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The Down and Out Co. just issued a dividend of \$2.21 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for \$60 a share, the company's cost of equity is percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Explanation: With the information given, we can find the cost of equity using the dividend growth model. Using this model, the cost of equity is: R E = [\$2.21(1.060)/\$60] + 0.060 = 0.0990 or 9.90% Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. Company's pretax cost of debt is percent. If the tax rate is 34 percent, the aftertax cost of debt is percent. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

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hw 14 problems 1,6,7,8 - The Down and Out Co just issued a...

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