Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. abc company has publicly traded $1,000 par value,

ABC Company has publicly traded $1,000 par value, 7% semiannual coupon bonds which mature in...

60.1K

Verified Solution

Question

Finance

image
ABC Company has publicly traded $1,000 par value, 7% semiannual coupon bonds which mature in 18 years. These bonds have a current market price of $1015. The company also has preferred stock with a $75 par and 8% annual dividend. The market has priced the preferred stock at $104. ABC's common stock has a beta of 1.5. You estimate the risk-free rate to be 4% and the required return on the market to be 15%. The company's average tax rate is 30%. What is the cost of the company's preferred stock? O 5.77% 5.32% 6.61% 04.98%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students