Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ardoin enterprises has to determine its cost of ca

Ardoin Enterprises has to determine its cost of capital using the following information: The firm...

60.1K

Verified Solution

Question

Finance

Ardoin Enterprises has to determine its cost of capital using the following information: The firm has $40,000,000 in corporate bonds currently selling at 97.5. (Bonds sell at a percentage of par value) The bonds mature in 12 years and have an annual coupon rate of 6.9% paid semiannually. The firm faces a 32% tax rate and has 1,500,000 shares of preferred stock that pay a dividend of $0.80 per year and currently sells for $9.10 per share. Common stock selling for $3.58 per share has just paid a dividend of $0.32 and is expected to grow by 4% forever. The firm has a beta of 1.42 and the risk free rate on treasury securities is 2.25%. The average return on the S&P500 is 10.54%. Calculate the cost of capital for the firm. Ardoin Enterprises has 25 million common shares outstanding.

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

Accounting
1.2K views

10a. Alpha's net accounts receivable were $500,000 atDecember 31, 2015, and $600,000 at December...

Basic Math
1.2K views

Suppose approximately 80% of all marketing personnel are extroverts, whereas about 60% of all computer programmers...

Biology
1.2K views

Gregor Mendel described allelic relationships as either dominant or recessive, and assumed that alleles and genes...

Biology
1.2K views

how did the sporophyte and gametophyte parts of the plant life cycle change as plants evolved from...

Physics
1.2K views

The value of C if circuit becomes resonant after closing the key is 1 OL...

Basic Math
1.2K views

Micromedia offers computer training seminars on a variety of topics In the seminars each student...

Basic Math
1.2K views

Factor the polynomialf(x) = 2x-5x - 14x+8given that x=4 is a zero of f(x). f(x)...

Statistics
1.2K views

employee It is known that the population of all these employee commute distances is approximately...

Accounting
1.2K views

viing a singie piartwise rate, determine the overhead rate per unit for blue Risge Marketing...

Accounting
1.2K views

Your Company purchased equipment on January 1, Year One for $475,000. The machines were estimated...

Finance
1.2K views

How can I find the Cost if longterm debt (AT & BT), Cost of preferred...

Accounting
1.2K views

Maple Leaf Industries, headquartered in Toronto, is a multiproduct company with three divisions: Pacific Division,...