Organic Produce Corporation has 8.8 million shares of common stock outstanding,

Question

Organic Produce Corporation has 8.8 million shares of common stock outstanding, 630,000 shares of 7.3 percent preferred stock outstanding, and 188,000 of 8.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.30 per share and has a beta of 1.33, the preferred stock currently sells for $106.70 per share, and the bonds have 14 years to maturity and sell for 89.5 percent of par. The market risk premium is 6.95 percent, T-bills are yielding 5.65 percent, and the firm

Explanation / Answer

Value of common stock=8800000*65.30(A) 574640000 Cost of Common Stock=5.65+1.33*(6.95-5.65) (B) 7.38 Value Of Preferred Stock=630000*106.70

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.