Question
In: Finance
11. APR Company's preferred stock is currently selling for $24.00, and pays a perpetual annual dividend...
11. APR Company's preferred stock is currently selling for $24.00, and pays a perpetual annual dividend of $2.80 per share. New issue of preferred stock would have $4 per share in flotation costs. The firm's tax rate is 40%. Compute the cost of new preferred stock.
12. ABC Corp. is undergoing a major expansion. The expansion will be financed by issuing new 12-year, $1,000 par, 9.5% annual coupon bonds. The market price of the bondsis $1,125 each. Flotation expense on the new bonds will be $50 per bond. The marginal tax rate is 35%. What is the pre-tax cost of debt for the newly-issued bonds?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
A. No Growth DDM A perpetual preferred stock pays an annual dividend of $2.20 per share...
A.
No Growth DDM A perpetual preferred stock pays
an annual dividend of $2.20 per share and investors require an 9%
return. The intrinsic value of a share of this stock is
_______.
$20.87
$24.44
$ 19.80
$23.98
B.
Constant Growth DDM A stock just paid a
dividend of $1.00 per share. Dividends are expected to grow at a
constant rate of 9% per year forever. Investors expect and require
a 12% return on this investment. The intrinsic value of...
- Earley Corporation issued perpetual preferred stock with a 12% annual dividend. The stock currently yields...
- Earley Corporation issued perpetual preferred stock with a 12%
annual dividend. The stock currently yields 10%, and its par value
is $100. Round your answers to the nearest cent. What is the
stock's value? Suppose interest rates rise and pull the preferred
stock's yield up to 13%. What is its new market value?
- Farley Inc. has perpetual preferred stock outstanding that
sells for $36 a share and pays a dividend of $5.00 at the end of
each year....
A company's perpetual preferred stock currently sells for $58.75 per share,
A company's perpetual preferred stock currently sells for $58.75 per share, and it pays a $3.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 2.50% of the issue price. What is the firm's cost of preferred stock?
A firm's preferred stock pays an annual dividend of $4, and the stock sells for $72.
Q4A firm's preferred stock pays an annual dividend of $4, and the
stock sells for $72. Flotation costs for new issuances of preferred
stock are 7% of the stock value. What is the after-tax cost of
preferred stock if the firm's tax rate is 39%? (Round your
answer to 2 decimal places.)Q5A firm is paying an annual dividend of $5.00 for its preferred
stock which is selling for $67.00. There is a selling cost of
$3.00. What is the after-tax...
You are considering to purchase a preferred stock. This stock pays an annual dividend of $3.88....
You are considering to purchase a preferred stock. This stock
pays an annual dividend of $3.88. How much is one share of this
stock worth today if the rate of return is 9.50%?
The firm's preferred stock pays an annual dividend of $5.40, and the stock sells for $60....
The firm's preferred stock pays an annual dividend of $5.40, and
the stock sells for $60. Flotation costs of preferred stock was 10%
of the stock value.
The firm's stock is selling for $80. The dividend paid in 2019
was $2.00, in 2018 was 1.87, in 2017 was 1.75 and .1.63 in
2016. If the firm issue new stocks a 8% of the selling
price will be charged as selling costs.
Bond’s yield to maturity is 12% The firm marginal tax...
Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently...
Travis Industries plans to issue perpetual preferred stock with
an $11.00 dividend. The stock is currently selling for $103.00, but
flotation costs will be 9% of the market price, so the net price
will be $93.73 per share. What is the cost of the preferred stock,
including flotation?
Kahn Inc. has a target capital structure of 45% common equity
and 55% debt to fund its $12 billion in operating assets.
Furthermore, Kahn Inc. has a WACC of 14%, a before-tax...
Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently...
Travis Industries plans to issue perpetual preferred stock with
an $11.00 dividend. The stock is currently selling for $103.00, but
flotation costs will be 9% of the market price, so the net price
will be $93.73 per share. What is the cost of the preferred stock,
including flotation?
Kahn Inc. has a target capital structure of 45% common equity
and 55% debt to fund its $12 billion in operating assets.
Furthermore, Kahn Inc. has a WACC of 14%, a before-tax...
A preferred stock with a $25 par value pays an annual dividend of 8% and is...
A preferred stock with a $25 par value pays an annual dividend
of 8% and is currently trading for $18 per share. What is the
annualized return being demanded by investors?
AT&T stock (T) just paid an annual dividend of $1.75 for the
most recent year. The current stock price is $38. Assuming
investors expect a constant growth rate in dividends of 6% into
perpetuity, what is the implied required return being demanded by
investors?
Richardson Enterprises, Inc. offers $120 par-value preferred stock that pays a 11% annual dividend. How much...
Richardson Enterprises, Inc. offers $120 par-value preferred
stock that pays a 11% annual dividend. How much are you willing to
pay for one share of this stock if you want to earn 12.8 percent on
an equity investment of this level of risk?
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