Roles and Functions
October 9, 2021
Explain why having an underlying theory for correctional interventions is important.Select TWO of the following four questions. Each response should be at least four double-spaced pages in length, and should not exceed five double-spaced pages.
October 9, 2021

Costs of capital | Financial markets homework help


Individual or component costs of capital) Compute the cost of the following:
a). A bond that has $1,000 par value (face value0 and a contract or coupon interest rate of 11 percent. A new issue would have a flotation cost of 5 percent of the $1,125 market value. The bond matures in 10 years. The firm’s average tax rate is 30 percent and its marginal tax rate is 34 percent. 


b). A new common stock issue that paid a $1.80 dividend last year. The par value of the stock is $15, and earnings per share have grown at a rate of 7 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant dividend-earnings ratio of 30 percent. The price of this stock is now $27.50, but 5 percent flotation costs are anticipated. 

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