Question: please answer without programmable calculator i swear i will upvote, please answer both quickly Q. 2 Cost of capital. Assume the following capital structure for
Q. 2 Cost of capital.
Assume the following capital structure for Al Amal Company:
Bonds $ 40000
Preferred stock $15000
Common stock $45000
to sell the issue, an average discount of $30 per bond must be given. The firm must also pay floatation cost of $ 20 per bond.
You have $50000 to invest in either asset X or asset Y. Probability and possible returns of the two asset are given below. Calculate the expected rate of return and the standard deviation of each asset and decide which asset is more risky. Asset X Asset Y Probability return probability return 0.25 6.5% 0.25 3.5% 0.50 7.5% 0.50 7.5% 0.25 8.5% 0.25 4.5%
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