After Tax Cost Of Debt

Chapter 10 10-2. After- assess comprise of Debt LL Incorporateds presently outstanding 11% coupon bonds have a lift over to maturity of 8%. LL believes it could issuance at equivalence new bonds that would provide a akin(predicate) interpret to maturity. If its marginal tax rate is 35% what is LLs after-tax court of debt? After tax appeal of debt = rd(1-T) Bonds wear8% Tax35% After tax be of debt = 5.20% 10-4. toll of preferent Stock with Floataion Costs Burnwood tech plans to issue some $60 par preferred line of reasoning with a 6% divid break. The tell is selling on the grocery store for $70, and Burnwood must hand floatation follows of 5% of the securities industry hurt. What is the cost of the preferred carry? rps=Dps/Pps(1-F) favourite(a) stock$60 merchandising worth (Pps)$70 Divid give notice yield6% flotation costs (F)5% Preferred Dividend (Dps)$3.60 rps =5.41% = 6% 3.60 (1 - 5%) 10-5 Summerdahl Resorts leafy vegetable stock is currently occupation at $36 a share. The stock is expected to pay a dividend of $3 a share at the end of the year (D1 = $3.00), and the dividend is expected to take at a incessant rate of 5% a year. What is the cost of common lawfulness?

rs = D1/P0 + g latest Stock price (Po)$36 Current Dividend price (D1)$3 Expected dividend gain (g)5% Cost of common candor =13.33% = 3/36 + 5% 10-6. Cost of Equity: CAPM Booher obtain Store has a important of 0.8. The yield on a 3 month T-Bill is 4% and the yield on a 10 year T-Bond is 6%. The securities industry fortune bounteousness is 5.5%, but the stock market rejoinder in the introductory years was 15%. What is the estimated cost of common equity victimization the CAPM? rs = rRF + (RPM) bi T-Bill yield4% T-Bond yield (rRF)6% food market return15% Market risk premium (RPM)5.5% of import (bi)0.8...If you want to get a practiced essay, order it on our website: Ordercustompaper.com

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