Corporate Finance (7211AFE)

A company has preferred stock outstanding which pays a dividend of $6 per share a year. The current stock price is $75 per share. What is the cost of preferred stock?

ABC limited have 50 000 shares outstanding that sell in the market for $17.50 each. Share’s beta coefficient is 1.2. The market risk premium is 8% and the risk-free rate is 5%. What is ABC limited’s cost of equity capital and the market value of equity?

Spartan Co. has earnings of 25 million per year every year. Currently the firm has no debt and the cost of capital is 13%. If tax is 35% what is the value of the firm?

Katie’s Boutique has zero-coupon bonds outstanding that mature in four years. The bonds have a face value of $1,000 and a current market price of $820. What is the company’s pre-tax cost of debt?

Douglass Enterprises has a capital structure which is based on 40 percent debt, 10 percent preferred stock, and 50 percent common stock. The after-tax cost of debt is 6 percent, the cost of preferred is 7 percent, and the cost of common stock is 9 percent. The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $125,000 and cash inflows of $76,000 a year for two years. What is the projected net present value? Should this project be accepted or rejected?

A stock had returns of 8 percent, -2 percent, 4 percent, and 16 percent over the past four years. What is the standard deviation of this stock for the past four years?