Investment Proposal

Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help this, compute the cost of capital for the firm for the following:

a. A bond that has a $1,000 par value (face value) and a contract or a coupon interest rate of 11.3%.

The bond is currently selling for a price of $1,129 and will mature in10 years. The firm’s tax rate is 34%.

b. If the firm’s bonds are not frequently traded how would you go about determining a cost of debt for this company?

c. A new common stock issue that paid $1.74 dividend last year. The par value of the stock is $16 and the firm’s dividends per share have grown at a rate of 7.8% per year. The growth rate is expected to continue in the foreseeable future. The price of the stock now is $27.65.

d. A preferred stock paying a 10.1% dividend on $129 par value. The preferred shares are currently selling for $146.68.

e. A bond selling to yield 13.4% for the purchaser of the bond. The borrowing firm faces a tax rate of 34%

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our Guarantees

Money-back Guarantee

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

Zero-plagiarism Guarantee

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

Free-revision Policy

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

Privacy Policy

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

Fair-cooperation Guarantee

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