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Question 8 a companys common stock has a market value

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Question 8A company’s common stock has a market value of $53.18 pershare and its next dividend is expected to be $2.96 per share.The stock’s beta is 1.4, the tax rate is 35%, and the marketrisk premium is 6.1% per year. The yield to maturity for thecompany’s long-term debt is 9.4% per year. If the riskiness ofthe company’s equity requires that it provide a risk premiumof 3.0% per year over the yield on its long-term debt, what isthe company’s annual cost of internal equity financing?
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Question 9A company’s perpetual preferred stock has a par value of $25per share and it pays a dividend rate of 8.5% per year. Thepreferred stock’s market value is $23.95 per share and thecompany’s tax rate is 37%. If the flotation costs for preferredstock are 4%, what is the company’s annual cost of newpreferred stock financing?
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Question 10A company’s weighted average cost of capital is 13.2% peryear and its tax rate is 31%. Which of the following projectsshould the company pursue?ProjectReturn112.8%213.1%313.5%410.7%511.7%3Hide Check my answer

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Term
Summer
Professor
N/A
Tags
Finance, Weighted average cost of capital, company s debt

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