Ivanhoe Wok Co. is expected to pay a dividend of $1.30 one year from today on...

    

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Ivanhoe Wok Co. is expected to pay a dividend of $1.30 one year from today on its common shares. That dividend is expected to increase by 5.00 percent every year thereafter. If the price of Ivanhoe common stock is $10.00, what is the cost of its common equity capital? Cost of common equity You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 8.2 percent coupon bonds are selling at a price of $790.40. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. (a1) What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.) Current YTM for the bonds % (a2) Your answer is incorrect. What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.) After-tax cost of debt % Cullumber Hand Trucks has a preferred share issue outstanding that pays a dividend of $1.30 per year. The current cost of preferred equity for Cullumber is 7.30 percent. Cullumber issues additional preferred shares that pay exactly the same dividend and the investment banker retains 8.50 percent of the sale price. (a2) What is the cost of the new preferred shares for Cullumber? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) Cost of new preferred shares for Cullumber de % Ivanhoe Wok Co. is expected to pay a dividend of $1.30 one year from today on its common shares. That dividend is expected to increase by 5.00 percent every year thereafter. If the price of Ivanhoe common stock is $10.00, what is the cost of its common equity capital? Cost of common equity You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 8.2 percent coupon bonds are selling at a price of $790.40. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. (a1) What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.) Current YTM for the bonds % (a2) Your answer is incorrect. What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.) After-tax cost of debt % Cullumber Hand Trucks has a preferred share issue outstanding that pays a dividend of $1.30 per year. The current cost of preferred equity for Cullumber is 7.30 percent. Cullumber issues additional preferred shares that pay exactly the same dividend and the investment banker retains 8.50 percent of the sale price. (a2) What is the cost of the new preferred shares for Cullumber? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) Cost of new preferred shares for Cullumber de %

Answer rating: 100% (QA)

a1 To find the current yield to maturity YTM of the bonds we need to use the bond price coupon rate ... View the full answer