Get a unique, high-quality and non-plagiarized paper from us today at the most affordable price
Email us : premieredtutorials@gmail.com
PREMIERED TUTORIALS

## Cost of Capital

Review the questions below and use the data provided in the question to solve the calculation. As you work through each equation, think about where the data for your company maybe found to make the same calculations and how the information from these calculation can inform your recommendations for your final project. Use the non-graded discussion board in this module to ask questions of your peers to inform your responses to the questions below.

1. What is the market interest rate onXYZ’s debt and its component cost of debt?
 Coupon rate 12% Coupons per year 2 Years to maturity 15 Price \$1,153.72 Face value \$1,000 Tax rate 40%

Market Interest Rate =

Cost of Debt =

1. What is the firm’s cost of preferred stock?
 Nominal dividend rate 10% Dividends per year 4 Par value \$100 Price \$111.10

Cost of Preferred Stock =

1. What isXYZ’s estimated cost of common equity using the CAPM approach?
 β 1.2 rRF 7% RPM 6%

Estimated Cost of Common Equity =

1. What is the estimated cost of common equity using the DCF approach?
 Price \$50 Current dividend \$4.19 Constant growth rate 5%

Estimated Cost of Common Equity =

1. What is the bond-yield-plus-risk-premium estimate for XYZ’s cost of common equity?
 “Bond yield + RP” premium 4% market interest rate onXYZ’s debt 10%

1. What is your final estimate for rs?
 METHOD ESTIMATE CAPM 14.20% DCF 13.80% rd + RP 14.00%

Estimate =

1. XYZ estimates that if it issues new common stock, the flotation cost will be 15%. XYZ incorporates the flotation costs into the DCF approach. What is the estimated cost of newly issued common stock, considering the flotation cost?
 % Flotation cost 15% Net proceeds after flotation \$42.50

Cost of Newly Issued Common Stock

1. What isXYZ’s overall, or weighted average, cost of capital (WACC)? Ignore flotation costs.
 Wd 30% rd (1 – T) 6.00% wp 10% rp 9.00% wc 60% rs 14.00%

Looking for the best essay writer? Click below to have a customized paper written as per your requirements.

#### How to Place an Order

Send the assignment details such as the instructions, due date/deadline, number of pages and college level to the customer support agent online on live chat,  fill in the assignment details at place an order or send the information to our email address premieredtutorials@gmail.com and a customer support agent will respond to you immediately.

Once you place your order, we choose for you the best and competent writer for your assignment based on each writer’s competence in handling a subject.

When the homework is completed, we have a quality assurance team that proofreads the assignment to ensure it meets the required rubric instructions from your professor.

After thorough review of your assignment, we send the paper to the client. In case you need any changes at this point, you can let us know so that we can handle it for you at no extra charge.

#### Why we should write your Paper

1. Money Return guarantee
2. 0% Plagiarism Rate
3. Guaranteed Privacy
4. Written from scratch by highly qualified writers
5. Communication at Any Time (24/7)
6. Flexible Pricing and Great Discount Programs
7. Timely Deliveries
8. Free Amendments
##### Looking for a similar assignment and in urgent need for help? Place your order and have excellent work written by our team of professionals to ensure you acquire the best grades.

We are here to assist you.