End-of-chapter problems. The following notations are used in this group of problems:

Читайте также:

Andy Rooney is a television commentator who usually talks about the pleasures and problems of everyday life. Here he tells us about a teacher that he liked very much.
C. Is radical feminism to blame for any social problems (e.g. increasing
Compare the problems in the U.S.A. and the U.K.
CONFERENCE ON POLLUTION PROBLEMS
Describe some of the problems that overpopulation causes, and suggest at least one possible solution.
Do you agree that bad habits, like smoking, can be dangerous? Why (not)? Does smoking lead to serious health problems? What are they?
Ecological problems

The following notations are used in this group of problems:

kps = the cost of preferred stock.

kcs = the cost of internally generated common funds

kncs = the cost of new common stock.

g = the growth rate.

kd = the before-tax cost of debt.

T = the marginal tax rate.

Dt = dollar dividend per share, where Do is the most recently paid dividend and D1is the forthcoming dividend.

P = the value (present value) of a security.

NP = the value of a security less any flotation costs incurred in issuing the security

12-1A.

a. Net price after flotation costs = $1,125 (1 -.05)

= $1068.75

$1068.75 = +

kd = 9.89%

= kd(1-T)

= 6.53%

b. kncs = + g

= +.07

=.1437 = 14.37%

c. kcs = + g

= +.07

=.1514 = 15.14%

d. kps = =

=.0877 = 8.77%

e. = kd(1 - T)

= 12% (1 -.34)

= 7.92%

12-2A.

a. = kd(1 - T)

= 8%(1 - 0.34)

= 5.28%

b. kncs = + g

kncs = + 0.05 = 9.85%

c. $1,150(.90) = $1,035 = net price after flotation costs

$1,035 = +

RateValueValue

For: 11% $1,079.56 $1,079.56

kd% 1,035.00

12% 1,000.00

$ 44.56$ 79.56

kd = 0.11 + ´ 0.01 =.1156 = 11.56%

= kd(1 - T)

= 11.56% (1 - 0.34) = 7.63%

d. kps =

kps = = 8.24%

e. kcs = + g

kcs = + 0.04 = 11.90%

12-3A. kncs = + g

kncs = + 0.06 =.1206 = 12.06%

12-4A. $958 (1 - 0.11) = $852.62 = the net price (value less flotation costs).

$852.62 = +

RateValueValue

For: 8% $914.20 $914.13

kd% 852.62

9% ______ 839.27

$61.58 $74.86

kd = 0.08 + ´ 0.01 =.0882 = 8.82%

= 8.82% (1 - 0.18) = 7.23%

12-5A. kps = = = 7.69%

12-6A. NP_d = +

$945 = +

Since the net price on the bonds, $945, is less than the $1,000 par value, the before-tax cost of the debt must be greater than the 12 percent coupon interest rate ($120 ÷ $1,000).

RateValueValue

12% $1,000.00 $1,000.00

kd% 945.00

13% _______ 935.44

$ 55.00$ 64.56

kd =.12 + ´.01 =.1285 = 12.85%

= kd(1 - T) = 12.85%(1 -.34) = 8.48%

12-7A. Cost of preferred stock (kps)

k_ps = =

= =

= 14.29%

12-8A. kcs = + g

= + 0.15

=.1874 = 18.74%

12-9A.If the firm pays out 50 percent of its earnings in dividends, its recent earnings must have been $8 ($4 dividend divided by.5).

Thus, earnings increased from $5 to $8 in five years. Using Appendix C and looking for a table value of.625 ($5/$8), the annual growth rate is approximately ten percent.

a. Cost of internal common stock (kcs):

kcs = + g

= +.10 = +.10

=.1759 = 17.59%

b. Cost of external common (new common) stock, kncs

kncs = + g

= +.10

=.1825 = 18.25%

12-10A.

a. Price (P_d) = +

= $140(6.418) + $1000(.422)

= $1,320.52

b. NP_d = $1,320.52(1 - 0.105)

= $1,181.87

c. Number of Bonds = = 423.06 ≈ 424 Bonds

d. Cost of debt:

$1,181.87 = +

RateValueValue

For 10% $1,246.30 $1,246.30

kd% 1,181.87

11% ________ 1,176.46

$ 64.43$ 69.84

kd = 0.10 + =.1092 = 10.92%

= 10.92%(1 - 0.34) = 7.21%

12-11A.

a. 1. Price (P_d) = +

= $100 (6.418) + $1,000 (.422)

= $1,063.80

2. NP_d = $1,063.80 (1 - 0.105)

= $952.10

3. Number of Bonds =

= 525.15 ≈ 526 Bonds

4. Cost of debt:

$952.10 = +

RateValueValue

For: 10% $1,000.00 $1,000.00

kd% 952.10

11% ________ 940.90

$ 47.90$ 59.10

kd = 0.10 + =.1081 = 10.81%

= 10.81%(1 - 0.34) = 7.13%

b. There is a very slight decrease in the cost of debt because the flotation costs associated with the higher coupon bond are higher ($138.65 in flotation costs for the 14 percent coupon bond versus $111.70 for the 10 percent coupon bond).

12-12A.

Source	Capital Structure	After-tax cost of capital	Weighted cost
Common Stock	40%	18%	7.2%
Preferred Stock	10%	10%	1.0%
Debt	50%	8% x (1-.35)	2.6%
		k_wacc =	10.8%

12-13A.

Net price after flotation costs = $975 - $15

= $960.00

Cost of debt:

$960.00 = +

RateValueValue

For: 6% $1,000.00 $1,000.00

k_d% 960.00

7% ________ 908.48

$ 40.00$ 91.52

kd = 0.06 + =.064 = 6.4%

= 6.4%(1 - 0.30) = 4.48%

Cost of common stock, kncs

kncs = + g

= +.05

=.129 = 12.9%

Source	Capital Structure	After-tax cost of capital	Weighted cost
Debt	60%	4.48%	2.69%
Common Stock	40%	12.9%	5.16%
		k_wacc =	7.85%

12-14A.

Net price after flotation costs = $1,050 (1-.04)

= $1,008.00

Cost of debt:

$1,008.00 = +

RateValueValue

For: 6% $1,096.84 $1,096.84

k_d% 1,008.00

7% ________ 1,000.00

$ 88.84$ 96.84

kd = 0.06 + =.069 = 6.9%

= 6.9 %(1 - 0.30) = 4.8%

Cost of preferred stock (kps)

k_ps = =

= =

=.091 = 9.1%

Cost of common stock, kncs

kncs = + g

= +.10

=.166 = 16.6%

Source	Market Value	Weight	After-tax cost of capital	Weighted Cost
Bonds	$4,000,000	.33	4.8%	1.6%
Preferred Stock	2,000,000	.17	9.1%	1.5%
Common Stock	6,000,000	.50	16.6%	8.3%
	12,000,000	1.00	k_wacc =	11.4%

Дата добавления: 2015-10-30; просмотров: 100 | Нарушение авторских прав

Читайте в этой же книге: END-OF-CHAPTER QUESTIONS | Solutions to Problem Set A | Section I. Calculate the change in EBIT, Taxes, and Depreciation (this becomes an input in the calculation of Operating Cash Flow in Section II). | Section IV. Calculate Free Cash Flow (using information calculated in Sections II and III, in addition to the Change in Capital Spending). | SOLUTION TO INTEGRATIVE PROBLEMS | Solutions to Problem Set B | Section IV. Calculate Free Cash Flow (using information calculated in Sections II and III, in addition to the Change in Capital Spending). | CHAPTER OUTLINE | Charlie Chaplin's first attempt at 'talkie' is discovered |

<== предыдущая страница	\|	следующая страница ==>
END-OF-CHAPTER QUESTIONS	\|	SOLUTION TO INTEGRATIVE PROBLEM

mybiblioteka.su - 2015-2024 год. (0.017 сек.)