Rollins corporation is estimating its wacc. its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. the firm could sell, at par, $100 preferred stock which pays a 12 percent annual dividend, but flotation costs of 5 percent would be incurred. rollins' beta is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent. rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $27.00 per share, and has a growth rate of 8 percent. the firm's policy is to use a risk premium of 4 percentage points when using the bond-yield-plus-risk-premium method to find rs. the firm's marginal tax rate is 40 percent. what is rollins' cost of preferred stock? select one: a. 10.0% b. 11.0% c. 12.0% d. 12.6% e. 13.2%
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Business, 22.06.2019 15:30
The school cafeteria can make pizza for approximately $0.30 a slice. the cost of kitchen use and cafeteria staff runs about $200 per day. the pizza den nearby will deliver whole pizzas for $9.00 each. the cafeteria staff cuts the pizza into eight slices and serves them in the usual cafeteria line. with no cooking duties, the staff can be reduced by half, for a fixed cost of $75 per day. should the school cafeteria make or buy its pizzas?
Answers: 3
Business, 23.06.2019 02:40
Some years ago it was estimated that the demand for steel approximately satisfied the equation p=194-25x x, and the total cost of producing x units of steel was upper c left parenthesis x right parenthesis equals 145 plus 40 x. (the quantity x was measured in millions of tons and the price and total cost were measured in millions of dollars.) determine the level of production and the corresponding price that maximize the profits.
Answers: 3
Rollins corporation is estimating its wacc. its target capital structure is 20 percent debt, 20 perc...
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