Common shares of Benson Industries Inc. have a beta of 0.88 The market risk premium is...
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Common shares of Benson Industries Inc. have a beta of 0.88 The market risk premium is 6.6 percent, and T-bills are currently yielding 0.21 percent. The firm paid dividends totalling $0.48 in the past 12 months ($0.12 quarterly), and dividends are expected to grow at a 2.5 percent annual rate indefinitely. If the stock trades for $12.15 per share, what is your best estimate of the firm's cost of equity? (Use both methods of estimation and average your results) Assuming Benson Industries Inc. also has an issue of preferred stock with a $0.40 stated dividend per year that has a market price of $7.75 per share. What is the firm's cost of preferred stock? Benson Industries Inc. has $275 million, face value, of long-term bonds with a yield to maturity of 5.73%. The market value of the debt is 101.2 percent of its face value. The firm's marginal corporate tax rate is 29.18 percent. What is the after-tax cost of debt? Use the information from, and costs you calcuated, in Q1, Q2, and Q3, with the following information: Benson Industries Inc. has 17.4 million shares of common equity outstanding. Assume the firm also has 11 million preferred shares outstanding. The market value of the firm's debt is 278.3 million. What is the total market value of the firm? What are the capital structure weights? What is the firm's WACC? Common shares of Benson Industries Inc. have a beta of 0.88 The market risk premium is 6.6 percent, and T-bills are currently yielding 0.21 percent. The firm paid dividends totalling $0.48 in the past 12 months ($0.12 quarterly), and dividends are expected to grow at a 2.5 percent annual rate indefinitely. If the stock trades for $12.15 per share, what is your best estimate of the firm's cost of equity? (Use both methods of estimation and average your results) Assuming Benson Industries Inc. also has an issue of preferred stock with a $0.40 stated dividend per year that has a market price of $7.75 per share. What is the firm's cost of preferred stock? Benson Industries Inc. has $275 million, face value, of long-term bonds with a yield to maturity of 5.73%. The market value of the debt is 101.2 percent of its face value. The firm's marginal corporate tax rate is 29.18 percent. What is the after-tax cost of debt? Use the information from, and costs you calcuated, in Q1, Q2, and Q3, with the following information: Benson Industries Inc. has 17.4 million shares of common equity outstanding. Assume the firm also has 11 million preferred shares outstanding. The market value of the firm's debt is 278.3 million. What is the total market value of the firm? What are the capital structure weights? What is the firm's WACC?
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Related Book For
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
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