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1. What is the price of a 10 year $1000 Par Value Bond if the

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1. What is the price of a 10 year $1000 Par Value Bond if the coupon rate is 10% (pays $100 a year if dividends paid annually) with 8 years to go to maturity. Interest rates (expected rate of return) is 8%?

2. Metals Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Metals Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Metals Copr's weighted average cost of capital?

3. The last paid dividend is $2 for a share of common stock that is currently selling for $20. What is the cost of retained earnings if the long-term growth rate in dividends for the firm is expected to be 8%?

4. Roto Roofing Corp. just paid a dividend of $1.85. This dividend is expected to grow at a constant annual rate of 3% per year. Roto Roofing's common stock is currently selling for $12.50. The firm can sell new stock at this price subject to flotation costs of 15%. What will the cost of the newly issued stock be?

5. Pony Corp. is undertaking a capital budgeting analysis. The firm's beta is 1.5. The rate on 30-year U.S. Treasury bonds is 5%, and the return on the S & P 500 index is 12 %. What is the cost of Pony's retained earnings?

6. Seven Eleven Stores is planning an expansion project that it desires to finance with newly issued preferred stock. The firm has an outstanding issue of preferred stock that pays a dividend of $4.25 per share, which is trading for $65 a share. The investment bankers have advised Seven Eleven that flatation costs will be 8% per share. What will be the cost of the newly issued preferred shares?
Submitted: 7 years ago.
Category: Homework
Expert:  Linda_us replied 7 years ago.

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