$600,000 Chapter 18 In-Class Problems (with solutions) ACG3151 How much of the dividend will be paid to the common shareholders, and how much will be paid to the preferred shareholders? Common Shareholders=$10,000 Preferred Shareholders=$80,000($60,000 cumulative, $20,000 participating) 3. Tom, Inc. issued 1,000,000 shares of $2 par common stock in 2005 for $9 per share. In 2008 Tom, Inc. repurchased 100,000 shares at a price of $8 per share. On March 30, 2009 they decide to resell 50,000 shares at a price of $13 per share.
$27 c. By what amount did the company's paid-in capital increase during 20X6? $1,724,000 d. Did Star's total legal capital increase or decrease during 20X6? By what amount? $680,000 increase 2. Bond computations: Straight-line amortization Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1.
The repayment of the coupon bond will be the par value plus the last coupon payment times the number of bonds issued. So: Coupon bonds repayment = 30,000($1,000+40)) = $31,200,000 The repayment of the zero coupon bond will be the par value times the number of bonds issued, so:Zeroes: repayment = 315,589($1,000+0) = $315,588,822 3. Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 9 percent, and have five years to maturity.
A. $16,500 B. $9,000 C. $25,500 D. $7,500 E. $50,000 Difficulty: Easy 2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2008, Dew reported income of $250,000 and paid dividends of $80,000.
| | | | | Score: | 0/10 | | 2. Chapter 10 - The Cost of Capital Question MC #65 Bosio Inc.'s perpetual preferred stock sells for $75.00 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?
RadicalVenOil, Inc., has a cost of equity capital equal to 22.8 percent. If the risk-free rate of return is 10 percent and the expected return on the market is 18 percent, then what is the firm's beta if the firm's marginal tax rate is 35 percent? 9. Which type of project do financial managers typically use the highest cost of capital when
This was the initial amount invested by two of Neverfail founding employees. 4,796,000 shares of common stock were issued at $0.01 par value. After Angel Investment: According to the case, George Lawrence and another Seattle Angel acquired 800,000 shares of convertible preferred stock at $1 per share. This gives a total of $800,000. With this new development, if we assume that the previous 4,796,000 shares of common stock that were originally issued in March of 1993 are now also worth $1 per share, this gives a total of $4,796,000.
Financial Markets (N13302) Mock Paper (2010/2011) Question 1 (a) BSC Industries has just paid its annual dividend of $10 per share. The dividend is expected to grow at a constant rate of 5% indefinitely. The beta of BSC industries stock is 1.3, the risk-free rate is 2%, and the market risk premium is 7%. (1) What is the intrinsic value of the stock? (2) What would be your estimate of intrinsic value if you believed that the stock was riskier, with a beta of 1.7?
The annual cash flows have the following projections: If the cost of capital is 10 percent find the following: a. The PVB = $86,000.77 as shown below. Can be found by inputing the number (21000) as a FV, putting 1 for N, 10% for I/Y, 0 for payments then computing for the PV. Then add all of these numbers up. For the second number (29000) put 2 as N,
ALTERNATIVE PROBLEMS AND SOLUTIONS ALTERNATIVE PROBLEMS 11- 1A. (Individual or Component Costs of Capital) Compute the cost for the following sources of Financing: a. A bond that has a $1,000 par value (face value) and a contract or coupon interior rate of 12%. A new issue would have a flotation cost of 6% of the $1,125 market value. The bonds mature in 10 years.