EXPENSE OF CAPITAL SCHOOL QUESTIONS
1 . Roland Corporation's last dividend (D0), which was paid recently, was $2. 50. The firm has a constant regarding 18. 8%. The business's beta pourcentage is 1 ) 2 . The required return with an average inventory in the market is definitely 13 percent, and the free of risk rate can be 7 percent. Roland's A-rated bonds will be yielding 10 %, its risk premium is definitely 4% and its particular current stock price is $30. Which from the following beliefs is the most affordable estimate of Roland's expense of retained profits, ks?
a. 10%b. 12%c. 14%d. 20%e. 26%
installment payments on your If a company can switch its capital structure to be able to change it is weighted normal cost of capital (WACC), which in turn of the pursuing results would be preferred? a.
The firm should try to diminish the WACC because this kind of action increases the value of the firm. w.
The organization should try to enhance the WACC because such an action raises the value of the firm. c.
The firm should try to diminish the WACC because this kind of action will decrease the worth of the firm. d.
The firm need to increase the WACC mainly because such an actions will cure the value in the firm. electronic.
The firm should not try to change the WACC because changing the WACC will not change the value with the firm.
three or more. The minor cost of capital __________ since more capital is brought up during a provided period. a.
does not modify
changes in an unforeseen way
4. Diggin Tools simply issued fresh preferred inventory, which people paid $85 in the stock marketplaces. Holders in the stock will receive an annual dividend equal to $9. 35. The flotation costs associated with the new issue were 6 percent and Diggin's little tax price is 30 percent. What is Diggins cost of preferred stock, kps? a.
almost eight. 2%
11. seven percent
Rollins Corporation is usually constructing the MCC routine. Its goal capital framework is 20 percent debt, 20 percent preferred share, and sixty...