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MyFinanceLab Ch. 14

MyFinanceLab Ch. 14 - Multiply that answer by 2 to get...

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MyFinanceLab: Ch. 14 Weights: o Wd: Book values of debt/ market value total capital o We: Market value of equity/ market value total capital Cost of debt: o Debt issued w/ $1000 par value, 8.0% coupon rate (interest paid semiannually), maturing in 20 years can be sold today for $1100: =RATE (40, 40, -1100, 1000)
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Unformatted text preview: Multiply that answer by 2 to get annual rate • Cost of preferred equity: o Div. per sh./ price per sh. • Cost of common equity: o DDM: =((D0(1+g))/Pe) + g =(D1/ Pe) + g o CAPM: • Flotation cost adjusted initial outlay: o Financing needed/ (1 – flotation cost %)...
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