QUESTION 9 Butcher Timber Company hired your consulting firm to help them estimate the cost of...
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QUESTION 9 Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 12.00%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 3.85% over a firm's own cost of debt. What is an estimate of the firm's cost of equity from retained earnings? O 15.85% O 14.74% 12.52% 13.31% 14.58% QUESTION 10 You were hired as a consultant to Pixel Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is its WACC? O 8.70% O 8.87% O 7.92% 7.66% 6.70% QUESTION 11 Trahan Lumber Company hired you to help estimate its cost of capital. You obtained the following data: D₁ = $1.25; Po = $20.00; g = 5.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock? O 13.98% O 11.65% O 12.35% O 11.07% 13.75% QUESTION 12 Weaver Chocolate Co. expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $55.00 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? Do not round your intermediate calculations. 10.35% O 12.42% O 11.49% O 10.77% O 10.66% QUESTION 9 Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 12.00%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 3.85% over a firm's own cost of debt. What is an estimate of the firm's cost of equity from retained earnings? O 15.85% O 14.74% 12.52% 13.31% 14.58% QUESTION 10 You were hired as a consultant to Pixel Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is its WACC? O 8.70% O 8.87% O 7.92% 7.66% 6.70% QUESTION 11 Trahan Lumber Company hired you to help estimate its cost of capital. You obtained the following data: D₁ = $1.25; Po = $20.00; g = 5.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock? O 13.98% O 11.65% O 12.35% O 11.07% 13.75% QUESTION 12 Weaver Chocolate Co. expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $55.00 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? Do not round your intermediate calculations. 10.35% O 12.42% O 11.49% O 10.77% O 10.66%
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Related Book For
Entrepreneurial Finance
ISBN: 978-1305968356
6th edition
Authors: J. Chris Leach, Ronald W. Melicher
Posted Date:
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