MV Pfd Corporation has debt with a coupon rate of 5% and a yield to...
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Finance
MV Pfd Corporation has debt with a coupon rate of 5% and a yield to maturity of 7%, a cost of equity of 15% and a cost of preferred stock of 10%. Its debt has a market value of $130 million and a book value of $150 million. The common equity has a book value of $80 million and the preferred stock has a book value of $60 million. The preferred stock is currently trading at a 25% premium over its book value per share, while the common stock trades at $20 per share, with 8 million shares outstanding. The tax rate is 30%.
What is this firms value of common equity, E (for use in the weights)?
A.
$15 million
B.
$80 million
C.
$160 million
D.
$60 million
E.
$150 million
F.
$75 million
G.
$130 million
H.
$180 million
I.
$140 million
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