Question1
Crypton electronics has a capital structure consisting of 38$ common stock and 62% debt. A debt issue of $1000 apar value 6.1% bonds that mature in 15 years and pay annual interest will sell for $975.00. Common stock of the firm is currently selling for $29.12 per share and the firm expects to pay a $2.28 dividend next year. Dividends have grown at a rate of 4.6% per year and are expected to continue to do so for the foreseeable future. What is Crypton cost of capital where the firms tax rate is 30%?
Question2
2) As a member of the finance department of ranch manufacturing your superisor has asked ypou to compare the appropriate discount rate to use when evlautating the purchase of new packing equipment for te plant. Under the assumption that the firms present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the frims capitla structure as follows:
bonds $3,800,000
preferred stock $1,800,000
common stock $6,500,000
To finance the purchase Ranch Manufacturing will sell 10 year bonds paying 6.6% per year at the market price of $1061. Preferred stock paying $1.95 dividend can be sold for $25.68, Common Stock fo Ranch Manufacturing is currently selling for $4.49 per share and the firm paid a $3.01 dividend last year. Dividends are expected to continue growing at a rate of 4.9% per year into the indefinite future. If the firms tax rate is 30% what discount rate shuld be used to evaluate the equipment purchase?
Ranch Manufacturing's WACC is ?
password:shiv
Crypton electronics has a capital structure consisting of 38$ common stock and 62% debt. A debt issue of $1000 apar value 6.1% bonds that mature in 15 years and pay annual interest will sell for $975.00. Common stock of the firm is currently selling for $29.12 per share and the firm expects to pay a $2.28 dividend next year. Dividends have grown at a rate of 4.6% per year and are expected to continue to do so for the foreseeable future. What is Crypton cost of capital where the firms tax rate is 30%?
Question2
2) As a member of the finance department of ranch manufacturing your superisor has asked ypou to compare the appropriate discount rate to use when evlautating the purchase of new packing equipment for te plant. Under the assumption that the firms present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the frims capitla structure as follows:
bonds $3,800,000
preferred stock $1,800,000
common stock $6,500,000
To finance the purchase Ranch Manufacturing will sell 10 year bonds paying 6.6% per year at the market price of $1061. Preferred stock paying $1.95 dividend can be sold for $25.68, Common Stock fo Ranch Manufacturing is currently selling for $4.49 per share and the firm paid a $3.01 dividend last year. Dividends are expected to continue growing at a rate of 4.9% per year into the indefinite future. If the firms tax rate is 30% what discount rate shuld be used to evaluate the equipment purchase?
Ranch Manufacturing's WACC is ?
password:shiv
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