Problem 10.01 – Holmes Company
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition, 10th Edition, and 11th Edition
Given the coupon rate, yield to maturity, and tax rate… find the after-tax cost of debt.
Given the coupon rate, yield to maturity, and tax rate… find the after-tax cost of debt.
Given the preferred stock price and annual dividend… find the company’s cost of preferred stock, rp?
Given the target capital structure of debt and common equity, yield to maturity, tax rate, and WACC… find the cost of common equity.
Given common stock, expected dividend paid, and constant growth rate… find the cost of equity from retained earnings and its cost of equity from issuing new common stock.
Given the estimated WACC, and the project’s size and rate of return… find which set of projects should be accepted.
Given the growth rate, stock price, last dividend, what the dividend will pay, beta, risk-free rate, and return on the market… find the cost of equity for each scenario using the DCF approach, the CAPM approach, and the bond-yield-plus-risk-premium approach.
Given the next expected dividend, growth rate, common stock, and new stock… find the retained earnings, percentage floatation F, and cost of new common stock re?
Given the debt, common equity, tax cost of debt, tax rate, stock price, last dividend, and growth… find the cost of common equity and its WACC.
Given the cost of common equity, the tax cost of debt, tax rate, debt, amount of shares, and price per share… calculate the WACC using market-value weights.
Given common equity, debt, tax rate, cost of retained earnings, cost of new common stock, the interest rate on debt, extra raised through debt, and investment required… calculate the WACC.