[den23]

Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. If the corporate tax rate is 35 percent, what is the aftertax cost of Ying's debt? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g. 32.16))

Bond Coupon Rate Price Quote Maturity Face Value
1 5.9% 101 8 years $25,000,000
2 6.8 108 12 years 38,000,000
3 5.3 100 24½ years 47,000,000
4 6.1 114 38 years 55,000,000

Aftertax cost of debt percent

[den23]

Given the following information for Evenflow Power Co. the WACC is percent. Assume the company's tax rate is 32 percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g. 32.16))


Debt:
4,500 8 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.
Common stock:
112,500 shares outstanding, selling for $61 per share; the beta is 1.11.
Preferred stock:
15,500 shares of 7.5 percent preferred stock outstanding, currently selling for $106 per share.
Market:
9 percent market risk premium and 7.5 percent risk-free rate.

[den23]

Floyd Industries stock has a beta of 1.82. The company just paid a dividend of $0.80, and the dividends are expected to grow at 4 percent. The expected return of the market is 17 percent, and Treasury bills are yielding 8 percent. The most recent stock price for Floyd is $61. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g. 32.16))

Required:
(a) Calculate the cost of equity using the DCF method.

Cost of equity percent

(b) Calculate the cost of equity using the SML method.

Cost of equity percent