accounting question

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QUESTION 1

1. The ABC Company has a cost of equity of 24.5 percent, a pre-tax cost of debt of 6.1percent, and a tax rate of 30 percent. What is the firm’s weighted average cost of capital if the proportion of debt is 27.9%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 2

1. The before-tax cost of debt is 12.3 percent. What is the after-tax cost of debt if the tax rate is 41 percent?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 3

1. ABC Industries will pay a dividend of $3 next year on their common stock. The company predicts that the dividend will increase by 6 percent each year indefinitely. What is the firm’s cost of equity if the stock is selling for $25 a share?

Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

1 points

QUESTION 4

1.

The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 5

1. If the market value of debt is $193,514, market value of preferred stock is $90,882, and market value of common equity is 436,192, what is the weight of preferred stock?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 6

1. You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%.What is the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 7

1. The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 8

1. Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and thecompany’s tax rate is 40%. What is the after-tax cost of debt?

1 points

QUESTION 9

1. ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 7 percent each year indefinitely. What is the dividend yield if the stock is selling for $35 a share?

Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

1 points

QUESTION 10

1. The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 11

1. ABC, Inc., has 820 shares of common stock outstanding at a price of $14 a share. They also have 671 shares of preferred stock outstanding at a price of $80 a share. There are 81, 8 percent bonds outstanding that are priced at $41. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 12

1. ABC Inc.'s perpetual preferred stock sells for $72.4 per share, and it pays an $9.1 annualdividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 13

1. The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 14

1. If the market value of debt is $114,756, market value of preferred stock is $103,266, and market value of common equity is 175,648, what is the weight of common equity?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 15

1. The common stock of Wetmore Industries is valued at $25.6 a share. The company increases their dividend by 4.7 percent annually and expects their next dividend to be $3.8. What is the required rate of return on this stock?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 16

1. ABC Company's last dividend was $4.9. The dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 5% forever. The firm's required return (r_s) is 17%. What is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 17

1. A stock's next dividend is expected to be $1. The required rate of return on stock is 14.8%, and the expected constant growth rate is 5.6%. What is the stock's current price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 18

1. ABC Inc., is expected to pay an annual dividend of $2 per share next year. The required return is 14.9 percent and the growth rate is 5.5 percent. What is the expected value of this stock five years from now?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 19

1. ABC's stock has a required rate of return of 18.4%, and it sells for $69 per share. The dividend is expected to grow at a constant rate of 6.2% per year. What is the expected year-end dividend, D₁?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 20

1. ABC Enterprises' stock is currently selling for $54 per share. The dividend is projected to increase at a constant rate of 3.1% per year. The required rate of return on thestock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 21

1. ABC Enterprises' stock is expected to pay a dividend of $1.6 per share. The dividend is projected to increase at a constant rate of 6.7% per year. The required rate of return on thestock is 12.5%. What is the stock's expected price 3 years from today (i.e. solve for P3)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 22

1. If D₁ = $7.4, g (which isconstant) = 8.9%, and P₀ = $76.8, what is the stock’s expected total return for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 23

1. If D₁ = $3.13, g (which isconstant) = 2%, and P₀ = $39.98, what is the stock’s expected dividend yield for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 24

1. A stock just paid a dividend of $3.2. The required rate of return is 19.6%, and the constant growth rate is 3.9%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 25

1. The common stock of Connor, Inc., is selling for $40 a share and has a dividend yield of 2 percent. What is the dividend amount?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 26

1. A stock just paid a dividend of D₀ = $2.4. The required rate of return is r_s = 9%, and the constant growth rate is g = 6.3%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 27

1. ABC is expected to pay a dividend of $4 per share at the end of the year. Thestock sells for $158 per share, and its required rate of return is 14.7%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 28

1. If last dividend = $3.1, g = 3.4%, and P₀ = $67.7, what is the stock’s expected total return for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 29

1. ABC's last dividend was $0.3. The dividend growth rate is expected to be constant at 34% for 3 years, after which dividends are expected to grow at a rate of 7% forever. If the firm's required return (r_s) is 16%, what is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 30

1. A stock isexpected to pay a dividend of $1.8 at the end of the year. The required rate of return is r_s = 11.7%, and the expected constant growth rate is g = 6.9%. What is the stock's current price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 31

1. ABC just paid a dividend of D₀ = $3.1. Analysts expect the company's dividend to grow by 33% this year, by 25% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 17%. What is the best estimate of the stock’s current market value?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 32

1. ABC’s last dividend paid was $1.1, its required return is 12.4%, its growth rate is 3.6%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points