Homework Help: Finance

Posted by Cyn on Tuesday, July 17, 2007 at 5:44pm.

If our company's bank loan has a 12 interest rate, what is our effective, after-tax interest cost? Assume the tax rate = 38%

If our preferred stock is paying a contractual $1.85 annual dividend and has current market price of $13.50, what is our cost of preferred stock?

A company pays a common stock dividend of $1.96. The stock's current price is 447.50 per share. Compute the cost of common equity.

The return on long-term US government securities (30 year Treasuries) = 5.25%. The projected 15-year average return of S&P 500 stocks is 6.05%. The stock we wish to invest in has a "beta" of 1.065. What does the CAPM formula say our cost of equity is? How risky is this stock as an investment?

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