Question: Why do we use an after tax figure for cost
Why do we use an after tax figure for cost of debt but not for cost of equity?
Answer to relevant QuestionsThe Muse Co. just issued a dividend of $2.75 per share on its common stock. The company is expected to maintain a constant 5.8 percent growth rate in its dividends indefinitely. If the stock sells for $59 a share, what is ...Mullineaux Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 12 percent, the cost of preferred stock is 5 percent, and the pretax ...An all-equity firm is considering the following projects:The T-bill rate is 4 percent, and the expected return on the market is 11 percent.a. Which projects have a higher expected return than the firm’s 11 percent cost of ...Why is underpricing not a great concern with bond offerings?Use the following information to answer the next three questions. Zipcar, the car sharing company, went public in April 2011. Assisted by the investment bank ...Teardrop, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $31 per share, but the book value per share is $7. Net income is currently $3.2 ...
Post your question