Finance 301: PorterWednesday April 16, 2008S.I.1. What is the formula for the weighted average cost of capital?2. Which part of the WACC is the component cost of debt?3. A 10 year, 15% semiannual coupon bond sells for $1,455.85. What is the cost of debt? (rd)4. A company’s current outstanding bonds have 12% coupon and 15%YTM. Their marginal tax rate is 40%. What is the after tax cost of debt?5. The formula for calculating the cost of preferred stock (rp) is rp= Dp/Pp. If a company’s perpetual stock sells at a price of $35.50 a share, and pays a dividend of $4.00, what is the cost of preferred stock?6. What are the three ways that the cost of common equity rs can be calculated?7. The risk free rate is 6.5%, the market risk premium is 8% and the beta is 1.46. What is the cost of common equity based on the CAPM?8. A company just paid a dividend of $3.45, and the current price is $45. It is expected to grow at a constant rate of 6%. What is the common cost of equity using the DCF approach?9. A company’s common stock is currently trading for $45 per share, and it is expected to pay a dividend of $3.55 at the end of next year. The constant growth rate is 6.5%. If they wanted to issue new stock, and would have a flotation cost of 12%, what would the cost of equity of the new stock be?10. If a company has wd of 25%, wp of 55% and wc of 20%, after tax cost of debt of 7.5%, cost of preferred stock of 6%, and cost of common equity of 12.5%, what is their
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