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This is a practice question for my Final Exam! Debt:

This is a practice question for my Final Exam!


Debt:

  • $1,000 par value
  • 9,500 of 7 percent coupon bonds outstanding,
  • 25 years to maturity
  • selling for 118 percent of par;
  • the bonds make semiannual payments.

Common stock:

  • 200,000 shares outstanding,
  • selling for $87 per share;
  • beta is 1.25.
  • 7 percent market risk premium and 3.1 percent risk-free rate.

Preferred stock:

  • 15,000 shares of 4.8 percent preferred stock outstanding,
  • currently selling for $100 per share.

 

 company's tax rate is 35 percent.





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