[answered] 1. Award: 10.00 points The Absolute Zero Co. just issued a

I need help with # 3, 6 and 7 in the PDF File. Finance Questions.?

1. Award: 10.00 points The Absolute Zero Co. just issued a dividend of \$2.50 per share on its common stock. The company is

expected to maintain a constant 5.2 percent growth rate in its dividends indefinitely. If the stock sells for \$50 a share, what is the company?s cost of equity? (Do not round intermediate

calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 10.46 % Cost of equity Hints

Hint #1 References

Worksheet Learning Objective:

14?01 How to

determine a firms

cost of equity

capital. Difficulty:

Basic Section: 14.2 The

Cost of Equity 2. Award: 10.00 points Suppose Stark Ltd. just issued a dividend of \$1.91 per share on its common stock. The company paid

dividends of \$1.60, \$1.66, \$1.73, and \$1.84 per share in the last four years. If the stock currently sells for \$45, what is your best estimate of the company?s cost of equity capital using

the arithmetic average growth rate in dividends? (Do not round intermediate calculations. Enter your

answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 8.97 % What if you use the geometric average growth rate? (Do not round intermediate calculations. Enter

your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity 8.94 % References

Worksheet Learning Objective:

14?01 How to

determine a firms

cost of equity

capital. Difficulty:

Basic Section: 14.2 The

Cost of Equity 3. Award: 10.00 points Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 12 years to

maturity that is quoted at 110 percent of face value. The issue makes semiannual payments and has an

embedded cost of 6 percent annually. What is the company?s pretax cost of debt? (Do not round intermediate calculations. Enter your

answer as a percent rounded to 2 decimal places, e.g., 32.16.) Pretax cost of debt % If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations.

Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt % Hints

Hint #1 References Worksheet Learning Objective:

14?02 How to

determine a firms

cost of debt. Difficulty:

Basic Section: 14.3 The

Costs of Debt and

Preferred Stock Section: 14.4 The Weighted Average

Cost of Capital 4. Award: 10.00 points Mullineaux Corporation has a target capital structure of 70 percent common stock, 10 percent preferred

stock, and 20 percent debt. Its cost of equity is 12 percent, the cost of preferred stock is 6 percent, and

the pretax cost of debt is 8 percent. The relevant tax rate is 40 percent. a. What is the company?s WACC? (Do not round intermediate calculations. Enter your answer as a

percent rounded to 2 decimal places, e.g., 32.16.) 9.96 % WACC b. What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a

percent rounded to 2 decimal places, e.g., 32.16.) 4.8 % Aftertax cost of debt Hints

Hint #1 References

Worksheet Learning Objective:

14?03 How to

determine a firms

overall cost of

capital and how to

use it to value a

company. Difficulty:

Basic Learning Objective:

14?04 How to

correctly include

flotation costs in

capital budgeting

projects. 5. Award: 10.00 points Lannister Manufacturing has a target debtequity ratio of .70. Its cost of equity is 14 percent, and its cost

of debt is 7 percent. If the tax rate is 38 percent, what is the company?s WACC? (Do not round

intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC 10.02 % Hints

Hint #1 References

Worksheet Learning Objective:

14?03 How to

determine a firms

overall cost of

capital and how to

use it to value a

company. Difficulty:

Basic Section: 14.4 The

Weighted Average

Cost of Capital 6. Award: 10.00 points You are given the following information for Watson Power Co. Assume the company?s tax rate is 30

percent. Debt: 6,000 6.1 percent coupon bonds outstanding, \$1,000 par value, 15 years to maturity,

selling for 104 percent of par? the bonds make semiannual payments. Common stock: 330,000 shares outstanding, selling for \$51 per share? the beta is 1.07. Preferred stock: 11,000 shares of 4 percent preferred stock outstanding, currently selling for \$71 per

share. Market:

6 percent market risk premium and 4.1 percent risk?free rate. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a

percent rounded to 2 decimal places, e.g., 32.16.) WACC Hints

Hint #1 References % Worksheet Learning Objective:

14?03 How to

determine a firms

overall cost of

capital and how to

use it to value a

company. Difficulty:

Basic Section: 14.4 The

Weighted Average

Cost of Capital 7. Award: 10.00 points Suppose your company needs \$18 million to build a new assembly line. Your target debt?equity ratio is .7.

The flotation cost for new equity is 7 percent, but the flotation cost for debt is only 4 percent. Your boss

has decided to fund the project by borrowing money because the flotation costs are lower and the needed

funds are relatively small. a. What is your company?s weighted average flotation cost, assuming all equity is raised externally? (Do

not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal

places, e.g., 32.16.) Flotation cost % b. What is the true cost of building the new assembly line after taking flotation costs into account? (Enter

your answer in dollars, not millions of dollars, e.g. 1,234,567. Do not round intermediate

calculations and round your answer to the nearest whole dollar amount, e.g., 32.) Amount raised \$ References Worksheet Learning Objective:

14?04 How to

correctly include

flotation costs in

capital budgeting

projects. Difficulty:

Basic Section: 14.6

Company Valuation

with the WACC

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