Spicer Reports Corp has 400,000 shares of common stock outstanding, 200,000 shares of preferred stock outstanding,...

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Finance

Spicer Reports Corp has 400,000 shares of common stockoutstanding, 200,000 shares of preferred stock outstanding, and40,000 bonds. If the common shares are selling for $25 per share,the preferred shares are selling for $12.50 per share, and thebonds are selling for 97 percent of par, what would be the weightused for common stock equity in the computation of Spicer'sWACC?
A. 18.59% B. 19.49%
C. 24.37% D. 62.50% E. 79.75%
Comfort Chair, Inc. has a $1.5 million ($1000 face value)10-year bond issue selling for 100.95% of par that pays an annualcoupon of 6.75%. What is the firm’s before-tax component cost ofdebt? (Hint: rate)
A. 6.62%
B. 6.75%
C. 6.86%
D. 7.08%
E. 7.36%
Vast Vegas, Inc. stock has a beta of 1.42, the current risk-freerate is 3.85, and the expected return on the market is 10.5percent. What is the cost of equity for the firm?
A. 13.29%
B. 14.30%
C. 14.85%
D. 15.15%
E. 17.12%

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Answer to Question 1 Market Value of Common Stock Number of shares Price per share Market Value of Common Stock 400000 25 Market Value of Common Stock 10000000 Market Value of Preferred Stock Number of shares Price per share Market Value of Preferred See Answer

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Spicer Reports Corp has 400,000 shares of common stockoutstanding, 200,000 shares of preferred stock outstanding, and40,000 bonds. If the common shares are selling for $25 per share,the preferred shares are selling for $12.50 per share, and thebonds are selling for 97 percent of par, what would be the weightused for common stock equity in the computation of Spicer'sWACC?A. 18.59% B. 19.49%C. 24.37% D. 62.50% E. 79.75%Comfort Chair, Inc. has a $1.5 million ($1000 face value)10-year bond issue selling for 100.95% of par that pays an annualcoupon of 6.75%. What is the firm’s before-tax component cost ofdebt? (Hint: rate)A. 6.62%B. 6.75%C. 6.86%D. 7.08%E. 7.36%Vast Vegas, Inc. stock has a beta of 1.42, the current risk-freerate is 3.85, and the expected return on the market is 10.5percent. What is the cost of equity for the firm?A. 13.29%B. 14.30%C. 14.85%D. 15.15%E. 17.12%