1. The current stock price for Firm D is $100 while the next dividend is $4. Suppose...
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1. The current stock price for Firm D is $100 while the next dividend is $4. Suppose that the dividend is expected to grow at 6% every year. Figure out the cost of equity for Firm D based on Dividend growth model.
2. Figure out the cost of debt if the bond price for Firm D is $920 for the 5-year bond with a par value of $1,000 and a coupon rate of 6% paid semiannually.
3. Firm D has a Debt-to-Equity ratio (D/E) of 200%. Figure out the debt-to-firm value (D/V) using the Debt-to-Equity ratio (D/E).
4. Figure out the weighted average cost of capital of Firm D (WACC) when the tax rate is 50%.
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1305637108
6th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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