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

Q

A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...

Basic Math
Q

In a hypothesis test, the significance level α (alpha) represents the threshold for how unlikely sample...

Basic Math
Q

You are working for SETI, the Search for Extraterrestrial Intelligence. One day, you receive a radio...

Physics
Q

Some plant cells have a secondary cell wall that contains a secondary metabolite which imparts...

Biology
Q

15 Four ic length 1 form a square frame Moment of inertia of this frame...

Physics
Q

Salaries for the research and development department of Richman Chemical are given as$48,397; $27,982; $42,591;...

Basic Math
Q

Consider the integral 2 x x 1 da In the following we will evaluate the...

Calculus
Q

13 Evaluate Special Limit C x 2 and Ax 0 05 Evaluate the limit itself...

Calculus
Q

1. Determine the payback period for an...

Accounting
Q

At the beginning of Year 2, Donald Company had $5,000 of inventory on hand. During...

Accounting
Q

An insurance policy charges a regular risk premium, X, at Years 0,1,2,3,,9 from today. The...

Accounting
Q

El estado de resultados en el que el total de todos los gastos se deduce...

Accounting