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Hankins Corporation has 6.1 million shares of common stock outstanding, 314,000 shares of 4.5 percent preferred...

Hankins Corporation has 6.1 million shares of common stock outstanding, 314,000 shares of 4.5 percent preferred stock outstanding, par value of $100, and 67,000 5.5 percent semiannual bonds outstanding, par value $2,000 each. The common stock currently sells for $73.80 per share and has a beta of 1.17, the preferred stock currently sells for $105.40 per share, and the bonds have 20 years to maturity and sell for 95.5 percent of par. The market risk premium is 6.5 percent, T-bills are yielding 3.1 percent, and the firm’s tax rate is 22 percent.

A) What is the firm's market value capital structure? ( Market Value Weight of Debt, Market Value weight of Stock, Market Value weight of equity) (Do not round intermediate calculations and round your answers to 4 decimal places)

B) What is the firms cost of each form of financing? (Aftertax cost of debt, Cost of Preferred Stock, Cost of Equity) (Round to two decimals)

C)

If the firm is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows? (Weighted Average Cost of Capital)

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jeff jeffy answered 1 year ago
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