Question: Question 26 Your firm has an expected stock return of 10%, an expected return on its preferred stock of 4%, and the yield on its

Question 26

Your firm has an expected stock return of 10%, an expected return on its preferred stock of 4%, and the yield on its bonds of 2%. The market value of common stock outstanding is $20 million, preferred stock is $2 million, and the market value of the firm's bonds is $3 million. The tax rate is 25%. What is the WACC?

Question 27

A share of preferred stock with an annual dividend of $5 has an expected return of 4.5% annually. What is the current estimated price of the preferred stock?

Question 28

Hoth Corporation's bonds carry a 1% coupon rate, pay coupons semiannually, and mature in 15 years. Similar bonds have a yield of 2%. What is the CURRENT YIELD for Hoth Corporation's bonds ?

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