St a lump sum of $2,750 today in an account that pays 6% annual interest and s o

Question

St a lump sum of $2,750 today in an account that pays 6% annual interest and s on deposit for exactly 15 years what is future value? (HINT: PMT-o 25If you inve Solve for FV) account that 26. If you invest $1,200 at the end of each year for the next 10 years in an pays 10% annual interest, determine the future value at the end of year 10. 27. Make the same investment as in investment in problem 26 but place the $1,200 in the account at the beginning of each year 28, J. Ross and Sons, Inc has a target capital structure that calls for 40% debt, 10% preferred stock and 50% common equity The firms current after-tax cost of debt is 6% and it can sell as much debt as it wishes at this rate. The firm's preferred stock currently sells for $90 a share and pays a dividend of $10 per share, however, the firm will only net s80 per share from the sale of the new preferred stock. Ross expects to retain 15,000rnings over the next year. Ross' common stock currently sells for $40 pe share, but the firm will only next $34 per share from the sale of the new common stock The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10% per year. What is the Cost of Capital for Preferred Stock? a. b. What is the cost of capital for Common Stock?

Explanation / Answer

25.

FV=2750*(1+6%)^15=6590.54

the above is the answer using future value formula=PV*(1+R)^T

we do only one question based on Chegg rule.

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