What is the cost of preferred stock r p for matrix

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What is the cost of preferred stock, r p , for Matrix Industries, if it can be issue formula = dividend / price = 8.33% Resene Décor Inc has a target capital structure of 40% debt and 60% comm debt is 13% and its marginal tax rate is 30%. The current stock price is $26.5 to grow at a constant rate of 5%. Cost of equity = (D 1 / P 0 ) + g = {D 0 (1 + g) / P 0 } + g = {$2.1 (1 + 5%) / $26.50} + 5% = ($2.205 / $26.50) + 5% = 13.32% Cost of debt = before tac cost of debt * (1 - tax rate) = (40% * 9.1%) + (60% * 13.32%) = 3.64% + 7.992% Andover Inc.’s balance sheet is below (thousands of dollars). Its cost of com 30%. Assume that the firm’s long term debt sells at par value. The firm has 6 = 7%
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MV of equity = 600,000 shares * $5 MV of debt = $1,495,000 (it has been assu Total of MV of equity and debt = MV of equ WACC = (weight of debt * cost of debt) + weight of equity * cost k. Debt = 40% Preferred stock = 20% Common equity = 40% Pre-tax cost of debt = 8.5% Preferred stock dividend = $3.50 Preferred stock current MP = $50 Beta = 0.95 Risk free (RF) rate = 5% ERM = 14% (i) Tax = 30% What is the firm’s cost of preferred stock? Cost of preferred stock = preferred dividend / current MP (ii) What is the firm’s cost of common stock? Cost of common stock = RF + beta (ERM - RF) Cost of debt = 8.5% * (1 - 30%) = $3,000,000 = $3,000,000 + $ = $4,495,000 = {($1,495,000 / $4,495,000) * 7%} + {($3,000,000 / $4,49 = (0.33259 * 7%) + (0.6674 * 14%) = 2.328% + 9.34% = 11.67% A firm has a capital structure containing 40% debt, 20% preferred stock and dividend is $3.50. The preferred stocks current market price is $50 per share market is 14%. The firm’s tax rate is 30%. = $3.50 / $50 =0.007 x 100 = 7% = 5% + 0.95 (14% - 5%) = 13.55% = 5.95%
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(iii) Calculate the firm’s after-tax weighted average cost of capital (WACC) Err:508 0.01528996 0.092 0.092 or 9.2% After tax WACC with new capital structure: Err:508 0.015108559375 10.34 0.1034 or 10.34% The firm decided to retire some of its debt by selling more common stock. Th costs of equity and debt do not change, what is the firm’s new after-tax WAC
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the return to market is 15%, what is the beta of stock M? ree rate)) et risk premium is 7%, what is Delta’s expected return on its stock? above) and 30% in the risk free asset: ) + (Expected Return of Risk free * weight risk free) beta) d beta of stock A is 1.4, what is the required rate of return, r S of stock A?
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et risk premium) e fund consists of four stocks with the following investments and betas: Portfolio Beta 0.533 -0.002 0.520 0.175 1.23 hat is the fund’s required rate of return? he market risk premium is 6%: that the risk free rate is 5% and the od buy?
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of that security also rises. t of equity) k’s required rate of return and explain why this would ed at $60 per share, and it pays a constant annual dividend of $5.00 per share? mon equity, with no preferred stock. Resene Décor’s before tax cost of 50. The last dividend was D 0 = $2.10 and these dividends are expected mmon equity is 14%, its before-tax cost of debt is 10% and its marginal tax rate is 600,000 shares of common stock outstanding that sell for $5.00 per share.
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umed figures are given question in thousands) uity + MV of debt t of equity) $1,495,000 95,000) * 14%} 40% common stock equity. The firm’s cost of debt (pre-tax) is 8.5% and its preferred s e. The firm’s common stock has a beta of 0.95 and the risk free rate is 5% and the retu
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he new capital structure is 25% debt, 55% equity and 20% preferred stock. Assuming CC?
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stock urn on the
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