A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to...
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Finance
A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a $1,000 face value, and a $1,100 market price. The companys 100,000 shares of preferred stock pay a $3 annual dividend, and sell for $30 per share. The companys 500,000 shares of common stock sell for $25 per share and have a beta of 1.5. The risk-free rate is 4%, and the market return is 12%. Assuming a 21% tax rate, what is the market value of the perferred shares ?
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