Ajax inc. is expecting to issue new debt at par with coupon rate of 6% and to
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Ajax inc. is expecting to issue new debt at par with coupon rate of 6% and to issue new preferred stock with $2.00 per share dividend at $20.00. Common stock is currently selling for $25.00 a share. Ajax expects to pay a dividend of $2.50 per share next year, and a market analysis indicates dividends will grow at 3% per year. the marginial tax rate is 40%.
a. what is the cost of debt, cost of preferred stock and cost of common stock?
b. if ajax raises capital using capital sturcture of 40% debt, 10% preferred stock and 50% common stock, what is the cost of capital for ajax, inc.?
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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