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Cost of common stock: Seerex Wok Co. is expected to pay a dividend of $1.10 one year from today on its common shares. That dividend is expected to

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Cost of common stock:  Seerex Wok Co. is expected to pay a dividend of $1.10 one year from today on its common  shares. That dividend is expected to increase by 5 percent every year thereafter. If the price of Seerex is $13.75, then  what is Seerex’s cost of common equity? (Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final  answer to two decimal places, for example 7.80%.) Cost of common equity =  % Cost of common stock: Fjord Luxury Liners has preferred shares outstanding that pay an annual dividend equal to  $13. If the current price of Fjord preferred shares is $94, then what is the after-tax cost of preferred shares for Fjord? (Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final  answer to two decimal places, for example 7.80%.) After-tax cost of preferred shares  % Cost of debt for a firm:  You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year  maturity, 9.5 percent coupon bonds that pay interest semiannually are selling at a price of $1,200. If these  bonds are the only debt outstanding for the firm, the after-tax cost of debt for this firm if the marginal tax rate for  the firm is 34 percent is _____%. (Omit the percent sign in your answer. Carry out all calculations to four decimal places an your final answer to two decimal places, for example 7.80%.) 1.  YTM =  % (Omit the percent sign in your answer. Carry out all calculations to four  final answer to two decimal places, for example 7.80%.) 2.  After-tax cost of debt =  % The Gearing Company has an after-tax cost of debt capital of 4 percent, a cost of preferred stock of 8 percent, a cost  of equity capital of 10 percent, and a weighted average cost of capital of 7 percent. Gearing intends to maintain its 
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current capital structure as it raises additional capital. In making its capital-budgeting decisions for the average-risk  project, the relevant cost of capital is 4 percent 7 percent 8 percent 10 percent Finance balance sheet:  The weighted average cost of capital represents the  and is used as the  in evaluating new  capital budgeting projects that are of the same risk level as the firm's existing projects. Computing terminal-year FCF:  Five years ago, a pharmaceutical company bought a machine that produces  pain-reliever medicine at a cost of $2 million. The machine has been depreciated over the past five years, and  the current book value is $800,000. The company decides to sell the machine now at its market price of $1  million. The marginal tax rate is 39 percent. Correct.      1. What is the relevant cash flow for the machine project? $ Show Solution Show Answer Incorrect.      2. What is the relevant cash flow if the market price of the machine is $600,00 $ Profitability index:  Suppose that you faced the following projects but had only $30,000 to invest. You should invest in  project(s)  . Project Cost ($) NPV ($)
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Cost of common stock: Seerex Wok Co. is expected to pay a dividend of $1.10 one year from today on its common shares. That dividend is expected to increase by 5 percent every year thereafter. If...

This question was asked on Jan 29, 2013 and answered on Jan 29, 2013.

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