Cost of Capital Essay

chaplets expect net income this year is $34,285.72, its established dividend payout proportionality is 30 helpings, its federal-plus-state revenue enhancement rate is 40 percent, and investors expect earnings and dividends to grow at a constant rate of 9 percent in the future. LEI pay a dividend of $3.60 per shargon last year, and its rip currently sells at a harm of $54 per share. LEI bum incur new capital in the undermentioned waysPreferred New like mental strain with a dividend of $11 tummy be sold to the public at a scathe of $95 per share. Debt Debt can be sold at an pursual rate of 12 percent.a. Determine the be of each capital structure component.b. presage the WACC.c. LEI has the following investment opportunities that are typical average-risk projects for the steadfast Project price at t = 0 Which projects should LEI accept? Why? 2(382)2. The Heuser Companys currently outstanding 10 percent coupon bonds have a devolve to maturity of 12 percent. Heuser bel ieves it could issue at comparability new bonds that would provide a similar yield to maturity. If its marginal tax rate is 35 percent, what is Heusers aftert-tax be of debt? 2(383)3. Trivoli Industries plans to issue some $100 par preferred stock with an 11 percent dividend. The stock is selling on the grocery store for $97.00, but Trivoli must pay floatation monetary values of 5 percent of the commercialise price, so the net price that firm will receive is $92.15 per share. What is Trivolis cost of preferred stock with flotation considered? 2(383)4. Zwing-Zook Enterprises has a beta of 1.45. The risk-free rate is 6 percent and the expected return on the market portfolio is 10 percent. The company instanter pays a dividend of $2 a share and investors expect it to experience a harvesting in dividends of 7 percent per annum for legion(predicate) years to come. a. What is the stocks compulsory rate of return according to CAPM? b. What is the stocks present market price per sha re, assuming this required return? 1(77)