Purchase Solution

Finance Questions

Not what you're looking for?

Ask Custom Question

To help strengthen my skills

Weighted average cost of capital

EXAMPLE OF SETUP FOR PROBLEM 18:

(1) Cost (after-tax) (2) Weights (3) Weighted Cost
Debt Kd
Preferred stock Kp
Common equity (retained Ke
earnings)
Weighted average cost of Ka
Capital

Problem 18:
Debt 30%
Preferred stock 15
Common equity 55

Additional information:
Bond coupon rate 13%
Bond yield to maturity 11%
Dividend, expected common $3.00
Dividend, preferred $10.00
Price, common $50.00
Price, preferred $98.00
Flotation cost, preferred $5.50
Growth rate 8%
Corporate tax rate 30%

10. The shares of the Dyer Drilling Co. sell for $60. The firm has a P/E ratio of 15.
Forty percent of earnings is paid out in dividends. What is the firm's dividend
yield?

12. Stan Pearl owns 300 shares of Royal Optical Company stock, which he bought for $16 per share.
He is in a 35 percent tax bracket. It is the first week in December, and he has already received the
Full cash dividend for the year of $1.20 per share. For his tax bracket, dividends are now taxed
At 15 percent. The stock is currently selling for 301/8. He has decided to sell the stock and
After paying broker commissions, his net proceeds will be $30 per share. His tax rate on
Capital gains is also 15 percent (the capital gains are long-term).

Page 2

4. The bonds of Goldman Sack Co. have a conversion premium of $55. Their
conversion price is $40. The common stock price is $42. What is the price of
the convertible bonds?

Purchase this Solution

Solution Summary

The solution has explanations for various finance questions

Purchase this Solution


Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basics of corporate finance

These questions will test you on your knowledge of finance.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.