Business, 04.05.2021 01:00, chris858232

Lexington Corporation has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 11.2%. Also, bonds can be issued at a pretax cost of 7.2%. Common Stock: Retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $62. Flotation costs will be $2 per share. The recent common stock dividend was $4.63. Dividends are expected to grow at 7% in the future. What is the cost of capital if the firm uses bonds and issues new common stock

Answers: 2

Show answers

Other questions on the subject: Business

Business, 21.06.2019 22:30, tinasidell1972

Your project team’s recommendations to increase productivity have been approved and your team is now working on an implementation plan. in order to accomplish the plan, several subject matter experts from various parts of the organization have been brought in to assist. you have noticed friction and conflict among team members. some of the disagreement and opposition on your team supports the achievement of team goals and objectives. this type of conflict can be described as:

Answers: 1

continue

Business, 22.06.2019 11:10, evansh78

Use the following account numbers and corresponding account titles to answer the following question. account no. account title (1) cash (2) merchandise inventory (3) cost of goods sold (4) transportation-out (5) dividends (6) common stock (7) selling expense (8) loss on the sale of land (9) sales which accounts would appear on the income statement?

Answers: 3

continue

Business, 22.06.2019 11:40, keke6361

On coral island in 2012, the labor force is 12,000, the unemployment rate is 10 percent, and the labor force participation rate is 60 percent. during 2013, 200 unemployed people found jobs and the working-age population increased by 1,000. the total number of people in the labor force did not change. the working-age population at the end of 2013 was the unemployment rate at the end of 2013 was round up to the second decimal. the labor force participation rate at the end of 2013 was round up to the second decimal.

Answers: 1

continue

Business, 22.06.2019 19:40, silasjob09

The martinez legal firm (mlf) recently acquired a smaller competitor, miller and associates, which specializes in issues not previously covered by mlf, such as land use and intellectual property cases. given the increase in the firm's size and complexity, it is likely that its internal transaction costs willa. decrease. b. increase. c. become external transaction costs. d. be eliminated.

Answers: 3

continue

Do you know the correct answer?

Lexington Corporation has a capital structure of 40% debt and 60% common equity. This capital struct...