All your Writing needs covered

A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions:

Calculate the price
of
your order:

275 words
+
Approximate price
$ 0.00

A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions:

5. A firm has determined its optimal capital structure, which is composed of the following sources

and target market value proportions:

Sources of Capital                                      Target Market Proportions

Long term debt                                                       30%

Preferred stock                                                        5

Common stock equity                                            65

Debt: The firm can sell a 20-year, $1,000 par value, 9 percent bond for $980. A flotation cost of 2

percent of the face value would be required in addition to the discount of $20.

Preferred Stock: The firm has determined it can issue preferred stock at $65 per share par value.

The stock will pay an $8.00 annual dividend. The cost of issuing and selling the stock is $3 per

share.

Common Stock: The firm’s common stock is currently selling for $40 per share. The dividend

expected to be paid at the end of the coming year is $5.07. Its dividend payments have been

growing at a constant rate for the last five years. Five years ago, the dividend was $3.45. It is

expected that to sell, a new common stock issue must be underpriced at $1 per share and the firm

must pay $1 per share in flotation costs. Additionally, the firm’s marginal tax rate is 40 percent.

Calculate the firm’s weighted average cost of capital assuming the firm has exhausted all retained

earnings.

5

Basic features

  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support

On-demand options

  • Writer's samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading

Paper format

  • 275 words per page
  • 12pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, CHicago/Turabian, Havard)

Guaranteed originality

We guarantee 0% plagiarism! Our orders are custom made from scratch. Our team is dedicated to providing you academic papers with zero traces of plagiarism.

Affordable prices

We know how hard it is to pay the bills while being in college, which is why our rates are extremely affordable and within your budget. You will not find any other company that provides the same quality of work for such affordable prices.

Best experts

Our writer are the crème de la crème of the essay writing industry. They are highly qualified in their field of expertise and have extensive experience when it comes to research papers, term essays or any other academic assignment that you may be given!

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00

Expert paper writers are just a few clicks away

Place an order in 3 easy steps. Takes less than 5 mins.

error: Content is protected !!
Open chat
1
Reliance Papers Inc.
Get Help With All Your Homework Questions. Any Deadline, Affordable, Quality Work Guaranteed!!