CORRECTTo help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost ofdebt for use in the WACC calculation?
QUESTION:3[QUESTION BANK ID:269611]TYPE:MULTIPLE CHOICECORRECTAssume that Kish Inc. hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D= $0.90; P= $27.50; andg = 7.00% (constant). Based on the DCF approach, what is the cost of common equity assuming no flotation costs?the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the
QUESTION:4[QUESTION BANK ID:269627]TYPE:MULTIPLE CHOICECORRECTMoerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. Ifthe decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the