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ament: Chapter 10 - The Cost of Capital Practice Problems s Problem wa-Through rett A Sone's common stock currently trades at $21.00 share. It is expected to pay an annual dividend of $2.50 a share at the end of the year (D = 52.50), and the constant growth rate is What is the company's cost of common equity it at of its equity comes from retained earnings? Do not round intermediate calculations, Round your answer to two decimal places 61.90 of the company sed new stock, it would incur a 11% Totation cost. What would be the cost of equity from new stock? Do not round Intermediate calculations. Round your answer to two decima . Check My Wor oblem Walk-Through 200 a share. It is expected to pay an annual dividend of $2.50 a share at the end of the year (D1 = $2.50), and the constant growth rate is 5% a year. of its equity comes from retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % fotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places. Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of 12%, dis marginal tax rates 40 The dividend was Do $3.25, and it is expected to grow at constant rabe. What is its cost of common equity and its WACC? Do not round Intermediate calculation. Round your own two a. WACC Check My Work (1 remaining) and 60% common equity, with no preferred stock. Its before tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is Po-$20.00. The last rate. What is its cost of common equity and its WACC? Do not round intermediate calculations. Round your answers to two decimal places Check My Work (1 remaining The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, prefer components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings is us have to se new common stock, the cost of new.common stock should be used in the firm's WACC calculation Quantitative Problemi Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock rate is 40%. Assume that the firm's cost of debt, 18, is 6.6%, the firm's cost of preferred stock, rp, is 6.1% and the firm's cost of equity is 10.6% for old equity, and 11.01% fo capital (WACC) it it uses retained earnings as its source of common equity? Do not round intermediate calculations. Round your answer to three decimal places What is the firm's weighted average cost of capital (WACC) ir it has to issue new common stock? Do not round intermediate calculations, Round your answer to three decimal pt debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these Sighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings is used in the firm's WACC calculation. However, if the firm will w common sock should be used in the firm's WACC calculation, es that is target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax Ta, ls 6.6, the firm's cost of pruterred stock, To, is 6.1% and the firm's cost of equity is 10.6% for old equity, r., and 11.04% for new equity, fe What is the firm's weighted average cost of source of common equity? Do not round Intermediate calculations. Round your answer to three decimal places (WACC) tahes to mour new common stock? Do not round intermediate calculations, Round your answer to three decimal places Check My Work (1 remaining)

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