Adams corporation is considering four average-risk projects with the following costs and rates of return
project ( $2,000, expected rate of return--16.00%
project ( $3,000, expected rate of return--15.00%
project (--$5,000, expected rate of return--13.75%
project ( $2,000, expected rate of return--12.50%
the company estimates that it can issue debt at a rate of rd = 10%, and its tax rate is 30%. it can issue preferred stock that pays a constant dividend of $3 per year at $40 per share. also, its common stock currently sells for $30 per share, the next expected dividend, d1, is $3.25, and the dividend is expected to grow at a constant rate of 4% per year. the target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.
what is the cost of each of the capital components? round your answer to two decimal places.
a. cost of %
b. cost of preferred stock %
c. cost of retained earnings %
d. what is adams' wacc? round your answer to two decimal places.
%
Answers: 1
Other questions on the subject: Business
Business, 22.06.2019 14:20, kevinglvz
Anew 2-lane road is needed in a part of town that is growing. at some point the road will need 4 lanes to handle the anticipated traffic. if the city's optimistic estimate of growth is used, the expansion will be needed in 4 years and has a probability of happening of 40%. for the most likely and pessimistic estimates, the expansion will be needed in 8 and 15 years respectively. the probability of the pessimistic estimate happening is 20%. the expansion will cost $ 4.2 million and the interest rate is 8%. what is the expected pw the expansion will cost?
Answers: 1
Business, 22.06.2019 23:00, infoneetusinghoyg22o
To increase sales, robert sends out a newsletter to his customers each month, letting them know about new products and ways in which to use them. in order to protect his customers' privacy, he uses this field when addressing his e-mail. attach bcc forward to
Answers: 2
Business, 22.06.2019 23:30, katiebaby4109
Sole proprietorships produce more goods and services than does any other form of business organization.
Answers: 2
Business, 23.06.2019 08:20, vhuyrtyy
You are a newspaper publisher. you are in the middle of a one-year rental contract for your factory that requires you to pay $500,000 per month, and you have contractual labor obligations of $1 million per month that you can't get out of. you also have a marginal printing cost of $.25 per paper as well as a marginal delivery cost of $.10 per paper. if sales fall by 20 percent from 1 million papers per month to 800,000 papers per month, what happens to the afc per paper?
Answers: 2
Do you know the correct answer?
Adams corporation is considering four average-risk projects with the following costs and rates of re...
Questions in other subjects:
Mathematics, 04.06.2020 14:02
Engineering, 04.06.2020 14:02
Mathematics, 04.06.2020 14:02
