MINI CASE DATA Flotation costs: Bond 15% P/S 2.01 Div for C/S 2.50 Div for P/S 1

Question

MINI CASE


DATA
Flotation costs:
Bond 15%
P/S 2.01
Div for C/S 2.50
Div for P/S 1.50
growth 6%
Bond
Coupon 8% 80.00
Par Value 1,000.00
Years 16
tax rate 34%
Mrkt prices
Bonds 1,035.00
P/S 19.00
C/S 35.00

A.
% of Mix
Bonds 38%
P/S 15%
C/S 47%

Bond's Cost of Capital
Net Price = 879.75

Cost of Capital = 9.49%
After-tax COC =

Preferred Stock's Cost of Capital
Net Price = 16.99

Cost of Capital =

Internal Common Stock's Cost of Capital
Market Price = 35.00

Cost of Capital =

Weighted Cost of Capital Using Internal Funds

Debt =
P/S =
C/S =


B.
External Common Stock's Cost of Capital
Net Price = 32.55

Cost of Capital =

Weighted Cost of Capital Using External Funds

Debt =
P/S =
C/S =

Explanation / Answer

http://www.google.co.in/url?sa=t&rct=j&q=flotation%20costs%3A%0Abond%2015%25%0Ap%2Fs%202.01%0Adiv%20for%20c%2Fs%202.50%0Adiv%20for%20p%2Fs%201.50%0Agrowth%206%25%0Abond%0Acoupon%208%25&source=web&cd=7&ved=0CFIQFjAG&url=http%3A%2F%2Fww2.justanswer.com%2Fuploads%2FBusinessTutor%2F2010-06-29_053652_Nealon.xls&ei=WSC4TruQKcLZrQfEor3pAw&usg=AFQjCNEdSpkpc-NzZLh92AiZvue-M65D6Q&sig2=RJUmotOe55G-gRbLNHi4qA

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