> ks > kd. d. ke > ks > WACC > kd. e. None of the statements above is correct. Capital components Answer: a Diff: E [iii]. Which of the following statements is most correct? a. If a company’s tax rate increases but the yield to maturity of its noncallable bonds remains the same‚ the company’s marginal cost of debt capital used to calculate its weighted average cost of capital will fall. b. All else equal‚ an increase in a company’s stock price will increase the
Premium Weighted average cost of capital Interest Dividend yield
Corporation’s last dividend (D0)‚ which was paid yesterday‚ was $2.50. The firm has a constant growth of 18.8%. The firm’s beta coefficient is 1.2. The required return on an average stock in the market is 13 percent‚ and the risk-free rate is 7 percent. Roland’s A-rated bonds are yielding 10 percent‚ its risk premium is 4% and its current stock price is $30. Which of the following values is the most reasonable estimate of Roland’s cost of retained earnings‚ ks? a. 10% b. 12% c. 14% d. 20% e. 26%
Premium Dividend yield Weighted average cost of capital Stock
is 30 percents‚ its federal-plus-state tax rate is 40 percent‚ and investors expect earnings and dividends to grow at a constant rate of 9 percent in the future. LEI paid a dividend of $3.60 per share last year‚ and its stock currently sells at a price of $54 per share. LEI can obtain new capital in the following ways: Preferred: New preferred stock with a dividend of $11 can be sold to the public at a price of $95 per share. Debt: Debt can be sold at an interest rate of 12 percent. a. Determine
Premium Dividend yield Finance Stock
Phoenix Credit Policy Decisions Collins Office Supplies is considering a more liberal credit policy to increase sales‚ but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales‚ production and selling costs are 78 percent‚ and accounts receivable turnover is five times. Assume income taxes of 30 percent and an increase in sales of $80‚000. No other asset buildup will be required to service the new accounts. a. What is the level of accounts
Premium Investment Balance sheet Rate of return
Frequently‚ the opposing sides of a merger or acquisition will have vastly different opinions of a firm’s value. For example‚ in 1994‚ part of AT&T’s purchase of Mc Caw Cellular called for AT&T to acquire Mc Caw’s 52 percent stake in LIN Broadcasting and purchase the remaining 48 percent at its fair value. LIN’S advisors valued the stock at $162 a share‚ while AT&T estimated its value at $100 a share. The difference resulted in a whopping $1.6 billion. As this example demonstrates‚ stock valuation
Premium P/E ratio Dividend yield Dividend
1.4 Topic: Proxy 2. Given the tax rates as shown‚ what is the average tax rate for a firm with taxable income of $311‚360? [pic] A. 28.25 percent B. 31.09 percent C. 33.62 percent D. 35.48 percent E. 39.00 percent Tax = .15($50‚000) + .25($25‚000) + .34($25‚000) + .39($211‚360) = $104‚680.40 Average tax rate = $104‚680.40/$311‚360 = 33.62 percent AACSB: N/A Bloom’s: Knowledge Difficulty: Basic Learning Objective: 1-3 Ross - Chapter 01 Section: 1.5 Topic: NASDAQ 3. The tax rates are
Premium Time value of money Dividend yield Net present value
The members who have entered the 4 Percent Group system can withdraw their participation at any given time‚ but they can still have access on the information they have given prior the cancellation. Gaining access to the educational trainings‚ webinars and skills can give the members and their companies an edge on building a firm basis for their websites that can direct them to their triumph and well-deserved earnings. Gaining admission to the 4 Percent program or platform can also provide the members
Premium Education Social network service Facebook
Renewables contributed 19 percent to our energy consumption and 22 percent to our electricity generation in 2012 and 2013‚ respectively. Both‚ modern renewables‚ such as hydro‚ wind‚ solar and biofuels‚ as well as traditional biomass‚ contributed in about equal parts to the global energy supply. Worldwide investments in renewable technologies amounted to more than US$ 214 billion in 2013‚ with countries like China and the United States heavily investing in wind‚ hydro‚ solar and biofuels. Renewable
Premium Wind power Renewable energy Energy development
6.1 Risk Structure of Interest Rates 1) The risk structure of interest rates is A) the structure of how interest rates move over time. B) the relationship among interest rates of different bonds with the same maturity. C) the relationship among the term to maturity of different bonds. D) the relationship among interest rates on bonds with different maturities. 2) The risk that interest payments will not be made‚ or that the face value of a bond is
Premium Bond Bonds
International Bulletin of Business Administration ISSN: 1451-243X Issue 9 (2010) © EuroJournals‚ Inc. 2010 http://www.eurojournals.com Dividend Policy: A Review of Theories and Empirical Evidence Husam-Aldin Nizar Al-Malkawi Corresponding Author‚ Faculty of Business‚ ALHOSN University P.O. Box 38772 - Abu Dhabi‚ UAE E-mail: h.almalkawi@alhosnu.ae Michael Rafferty Senior Research Analyst‚ WRC‚ University of Sydney‚ Australia E-mail: m.rafferty@econ.usyd.edu.au Rekha Pillai Faculty of Business
Premium Dividend yield Stock Dividend