Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
The tax rate of the firm is currently 40%. The needed financial information and data are as follows:
Debt Nova can raise debt by selling $1,000-par value, 6.5% coupon interest rate, 10 year bonds on which annual interest payments will be made. To sell the issue, an average discount of $20 per bond needs to be given. There is an associated flocation cost of 2% of par value.
Preferred Stock Preferred Stock can be sold under the follow terms: The Security has a par value of $100 per share, the annual divedend rate is 6% of the par value, and the flotation cost is expected to be $4 per share. The preferred stock is expected to sell for $102 before cost considerations.
Common Stock The current price of Nova’s common stock is $35 per share. The cash dividend is expected to be $3.25 per share next year. The firm’s dividends have grown at an annual rate of 5% and it is expected that the dividend will continue at this rate for the forseeable future. The flotation costs are expected to be approximately $2 per share. Nova can sell new common stock under these terms.
Retained Earnings The firm expects to have available $100,000 of retained earnings in the coming year. Once these retained are exhausted, the firm will use new common stock as the form of common stock equity financing.
Create a spreadsheet to answer the following questions.
A. Calculate the after-tax cost of debt
B. Calculate the cost of preferred stock
C. Calculate the cost of retained earnings
D. Calculate the cost of new common stock
E. Calculate te firm’s weighted average cost of capital using retained earnings and the capital structure weights shown in the table above.
F. Calculate the firm’s weigted average cost of capital using new common stock and the capital structure weights shown in the table above.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more