Question: Help finding first increments second increment third increment and additional funds % eBook Rolodex Inc. is in the process of determining its capital budget for

Help finding first increments second increment third increment and additional funds %

Help finding first increments second increment
eBook Rolodex Inc. is in the process of determining its capital budget for the next fiscal year. The firm's current capital structure, which it considers to be optimal, is contained in the following balance sheet: Rolodex Inc. Balance Sheet (in Millions of Dollars) Full Bo Current assets $ 126 Accounts payable $ 15 Fixed assets 249 Other current liabilities 20 Total assets $ 375 Long-term debt 68 Preferred stock 102 Common stock (24 million shares at par) 24 Contributed capital in excess of par 20 Retained earnings 126 Total liabilities and equity $ 375 Discussions between the firm's financial officers and the firm's investment and commercial bankers have yielded the following information: Rolodex can borrow $24 million from its bank at a pretax cost of 14 percent. Rolodex can borrow $65 million by issuing bonds at a net price of $598 per bond. The bonds would carry a 10 percent coupon rate and mature in 24 years. Additional debt can be issued at a 18 percent pretax cost Preferred stock can be issued at a pretax cost of 15.5 percent. Rolodex expects to generate $160 million in net income and pay $1 per share in dividends. . The $1 per share dividend (D1) represents a growth of 5.5 percent over the previous year's dividend. This growth rate is expected to continue for the foreseeable future. The firm's stock currently is trading at $16 per share. . Rolodex can raise external equity by selling common stock at a net price of $14 per share. . Rolodex's marginal tax rate is 40 percent. a. Compute Rolodex's marginal cost of capital schedule. Use Table II and Table IV to answer the question. Round your answers to two decimal places. Weighted marginal cost of capital

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