Foust has 25-year non-callable bonds outstanding with a face value of $1,000, an 12% annual coupon, and a market price of $1,320. Foust can issue perpetual preferred stock at a price of $47.50 a share. The stock would pay a constant annual dividend of $3.80 a share. Its capital structure, considered to be optimal, is as follows: Debt $111,000,000 Preferred Stock $4,000,000 Common equity $155,000,000 Total liabilities and equity $270,000,000 If the firm’s bonds earn a return calculated in part (i), based on the bond-yield-plus-risk-premium approach, what will be cost of common equity?

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A: No. of bonds = 10,000 Selling price = 102% of par Par = $1,000 No. of pref shares = 500,000 Selling…

Q: The market risk premium for FCIB is 9 percent, and has a tax rate of 35 percent. The risk-free rate…

A: Capital Structure: It refers to the mix or proportion of different securities such as bonds, equity,…

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A: Formulas:

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A: Please find the answers to the above questions below:

Q: IRIS Corp. has determined its optimal capital structure as image Debt: The firm can sell a 10-year,…

A: Formulas:

Q: Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred…

A: WACC is the rate a company expected to pay on average to security holders to finance the assets.

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: WACC takes all source of capital into account and assigns weights for computation. WACC increase…

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A: Book Weight = Book Value / Total Value  Market Value Weight = Market Value / Total Value

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Q: Masterson, Inc., has 8 million shares of common stock outstanding. The current share price is $82,…

A: Different securities are issued by firm to arrange or get the funds for the business. These…

Q: The market risk premium for FCIB is 9 percent, and has a tax rate of 35 percent. The risk-free rate…

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Q: Sound Systems has 200 shares of common stock outstanding at a market price of $37 a share. The firm…

A: Weighted average cost of capital is the firms cost of capital after taking into account the…

Q: Dinklage Corp. has 121 million shares of common stock outstanding. The current share price is $49,…

A: Weight of common stock : it means the ratio of equity and total  capital used by the firm whether on…

Q: Lingenburger Cheese Corporation has 6.6 million shares of common stock outstanding, 235,000 shares…

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Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: The provided information are: Stock price = $64 Dividends = $1.10 Growth rate = 3% Risk free rate =…

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A: The calculation cost of debt is done below:

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Bonds:- Total No. of Bonds Outstansding is 10,000 Bond selling at 102% of face value Coupon rate is…

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A:

Q: The market risk premium for FCIB is 9 percent, and has a tax rate of 35 percent. The risk-free rate…

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Q: IRIS Corp. has determined its optimal capital structure as image Debt: The firm can sell a 10-year,…

A: The calculation is done below: The formulation sheet is represented below:

Q: Calculate the company’s w.a.c.c.

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Q: Consider Higgins Production which has the following information about its capital structures:  Debt…

A: GIVEN, rm-rf= 6%rf=4%beta = 0.80

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A: WACC = (cost of equity * weight of equity) + (cost of debt *weight of debt)

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Given information: Market price of common stock is $64 Dividend paid amount is $1.10 Dividend…

Q: The market risk premium for FCIB is 9 percent, and has a tax rate of 35 percent. The risk-free rate…

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Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Market weights in the capital structure represents the net weight each capital source owns in the…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: The cost of equity is the minimum required rate of return by the shareholders for the capital…

Q: The Smith Company has 10,000 bonds outstanding. The bonds are selling at 102% of face value, have a…

A: Given information: Stock price is $64 Dividend paid is $1.10 Growth rate is 3% Risk free rate is…

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A: given, risk free rate=3%market risk premium=6%beta = 1.2

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.