sugar cane refining and Processing Company a comprehensive case in measuring a firm's cost of capital

Chegg Study QUESTIONS 1. SCRPC uses notes to finance its working capital and its seasonal needs. Should the firm use its cost of notes in the measure of the cost of capital? 2. Estimate the firm's after-tax cost for long debt. Why do analysts use the after-tax measure in the calculation of a firm's cost of capital? 3. Calculate SCRPC's cost for preferred stock. Why is there not a tax adiustment? Journal of Business Case Studies Third Quarter 2014 Volume 10, Number3 Copyright by author(s); CC-BY 340 The Clute Institute 4. Calculate the cost for the current common stock investors. (a) Estimate the cost for common stock using the Gordon Model (dividend valuation model). (b) Calculate the cost of common stock using the Capital Asset Pricing Model (c) Find the cost of common stock using Bond Risk Premium Approach. 5. Calculate SCRPC's cost of capital when retained earnings is the source of common stock financing and the Gordon Model estimate is used. Use current market values of the financial instruments to determine the components weights (see Exhibit VI). 6. What is SCRPC's cost of capital when the firm has to issue new common stock and the Gordon Model estimate is used? (See Exhibit VII). 7. Calculate the "Break Point" that is when the firm Chegg Study QUESTIONS 1. SCRPC uses notes to finance its working capital and its seasonal needs. Should the firm use its cost of notes in the measure of the cost of capital? 2. Estimate the firm's after-tax cost for long debt. Why do analysts use the after-tax measure in the calculation of a firm's cost of capital? 3. Calculate SCRPC's cost for preferred stock. Why is there not a tax adiustment? Journal of Business Case Studies Third Quarter 2014 Volume 10, Number3 Copyright by author(s); CC-BY 340 The Clute Institute 4. Calculate the cost for the current common stock investors. (a) Estimate the cost for common stock using the Gordon Model (dividend valuation model). (b) Calculate the cost of common stock using the Capital Asset Pricing Model (c) Find the cost of common stock using Bond Risk Premium Approach. 5. Calculate SCRPC's cost of capital when retained earnings is the source of common stock financing and the Gordon Model estimate is used. Use current market values of the financial instruments to determine the components weights (see Exhibit VI). 6. What is SCRPC's cost of capital when the firm has to issue new common stock and the Gordon Model estimate is used? (See Exhibit VII). 7. Calculate the "Break Point" that is when the firm