Cost of Capital Essay

florilegiums appeared net income this category is $34,285.72, its established dividend payout ratio is 30 percents, its federal-plus-state tax income rate is 40 percent, and investors expect earnings and dividends to grow at a constant rate of 9 percent in the future. chaplet paid a dividend of $3.60 per share pass away year, and its stock currently sells at a price of $54 per share. LEI burn down obtain new capital in the following slipwayPreferred New preferred stock with a dividend of $11 can be sold to the public at a price of $95 per share. Debt Debt can be sold at an interest rate of 12 percent.a. Determine the cost of each capital structure component.b. Calculate the WACC.c. LEI has the following investment opportunities that are typical average-risk projects for the starchy Project equal at t = 0 Which projects should LEI accept? Why? 2(382)2. The Heuser caller-ups currently outstanding 10 percent coupon bonds exhaust a yield to maturity of 12 percent. Heuser believ es it could issue at tally new bonds that would provide a similar yield to maturity. If its marginal tax rate is 35 percent, what is Heusers aftert-tax cost of debt? 2(383)3. Trivoli Industries plans to issue some $ one C par preferred stock with an 11 percent dividend. The stock is merchandising on the market for $97.00, but Trivoli must pay flotation be of 5 percent of the market price, so the net price that firm will receive is $92.15 per share. What is Trivolis cost of preferred stock with flotation considered? 2(383)4. Zwing-Zook Enterprises has a beta of 1.45. The risk-free rate is 6 percent and the pass judgment return on the market portfolio is 10 percent. The company rescuely pays a dividend of $2 a share and investors expect it to experience a maturement in dividends of 7 percent per annum for many years to come. a. What is the stocks required rate of return according to CAPM? b. What is the stocks present market price per share, assuming this required return? 1(77)