Questions from Corporate Finance

Q: Holdup Bank has an issue of preferred stock with a

Holdup Bank has an issue of preferred stock with a stated dividend of $4.25 that just sold for $93 per share. What is the bank’s cost of preferred stock?

Q: Viserion, Inc., is trying to determine its cost of debt.

Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 103 percent of face value. The issue makes semiannual payment...

Q: Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond

Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond three years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 22 percent.a. What is the pretax...

Q: For the firm in Problem 7, suppose the book value

For the firm in Problem 7, suppose the book value of the debt issue is $95 million. In addition, the company has a second debt issue on the market, a zero coupon bond with eight years left to maturity...

Q: Targaryen Corporation has a target capital structure of 70 percent

Targaryen Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity is 10 percent, the cost of preferred stock is 5 perc...

Q: You have an investment that will pay you 0.67 percent

You have an investment that will pay you 0.67 percent per month. How much will you have per dollar invested in one year? In two years?

Q: Leah, Inc., is proposing a rights offering. Presently there are

Leah, Inc., is proposing a rights offering. Presently there are 375,000 shares outstanding at $67 each. There will be 50,000 new shares offered at $58 each.a. What is the new market value of the compa...

Q: The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify

The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:Stock price …………………………………………………………………………………………… $...

Q: Suppose we are thinking about replacing an old computer with

Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,560,000; the new one will cost $1,872,000. The new machine will be depreciated straight-line to zero over...

Q: In Problem 10, what would the ROE on the investment

In Problem 10, what would the ROE on the investment have to be if we wanted the price after the offering to be $75 per share? (Assume the PE ratio remains constant.) What is the NPV of this investment...