FIN 3403exam 4 question 1

FIN 3403exam 4 question 1 - 1. 1.Bluefield Corporation has...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1. 1.Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred stock that pay an annual dividend of $8, and 200,000 $1,000 par value bonds with a 10 percent coupon(semiannual interest) and 20 years to maturity. At present, the common stock is selling for $50 per share, the bonds are selling for $950.62 per $1,000 of face value, and the preferred stock is selling at $74 per share. The estimated required rate of return on the market is 13 percent, the risk free rate is 8 percent, and Bluefield’s beta is 1.4. Bluefield’s tax rate is 30 percent. Estimate the cost of each source of financing, the weights to apply to each source, and the WACC. (Re=15%, Rdat=7.42%, Rp= 10.81%, We= .561%, Wd= .356, Wp=.083, WACC= 11.95%) 2. The Vogt corporation paid a dividend of $4.20 on its stock in the year just ended. If the dividends and earnings of the stock are projected to grow at a rate of 6.4%
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

FIN 3403exam 4 question 1 - 1. 1.Bluefield Corporation has...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online