FIN Cardinal -...

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The company is preparing to make investments and wants to determine the discount rate, or cost of capital,  is 34%. The firm is in need of $5 million dollars in external funds. Your bond advisor suggests that new bond  Eight percent (8%) coupon bonds outstanding. The par value is $1000 and they mature in ten years. They  Stock: 9,000 shares of 4% preferred stock with a par value of $100, and is currently selling for $60 per  share. * Market Information: The risk of the market is 8% and the risk-free rate is 3%. The industry debt- equity ratio is 33%. The flotation rate for debt is 3% and for equity it is 4%. Calculate the existing weighted  average cost of capital, Calculate the new cost of capital when the $5M in new funds is added. Show your 
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This note was uploaded on 09/04/2011 for the course FIN 3030 taught by Professor Houston during the Spring '11 term at Southeaster Oklahoma State University.

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FIN Cardinal -...

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