Mini case #3
INTRUCTIONS: Answer all 4 questions. Assignment should be submitted in Blackboard by the due date. This is a 25 point assignment – six (6) points for each correct answer and 1 point for answering all 4 questions
Partial credit will be given if you give the wrong answer but show the correct formula.
A firm has the following capital structure:
The preferred stock price per share is $60 and pays a $5 dividend. Common stock shares sell for $30 and pay a $2 dividend. Dividends for common stock are expected to grow by 3%. Bond price is $950, and the bond coupon rate is 6.5%. The bonds mature in 7 years.
The firm’s tax rate is 38%. The company has $3,500,000 in sales, and expenses of $1,200,000. The initial investment of $5,500,000 will be depreciated straight-line over 10 years. The project is expected to last 10 years.
_____________________ (Chapter 13)
______________________ (Chapter 9)
SEVEN SIGNS IN JOHN PROJECT
______________________ (Chapter 8)