09 May WHAT IS THE WEIGHTED AVERAGE COST OF CAPITAL FOR JACK’S PET SHOP?
27. Venus Inc. has a 10% coupon rate bond that matures in 10 years. The bond pays coupon payments semiannually. What is the market price of a $1 000 face value bond if the yield to maturity is 13%?a. $834.72b. $849.04c. $867.80d. $783.52e. $815.8228. Apple’s bonds currently sell for $1 150 and have a par value of $1 000. They pay an 8% annual coupon rate and have a 15-year maturity. What is their yield to maturity (YTM) of the bond?a. 6.41%b. 3.96%c. 5.60%d. 4.52%e. 5.30). Neptune Inc.’s bonds currently sell for $1 200 and have a par value of $1 000. They pay a $110 annual coupon and have a 10 years to maturity but they can be called in 3 years at $1 120. What is their yield to call (YTC)?a. 7.09%b. 7.54%c. 8.28%d. 6.20e. 7.983. Shares of common stock of the Samson Co. offer an expected total return of 10%. The dividend is expected to grow at a constant 4% per year. The dividend yield must be:a. 6.00%b. 10.00%c. 4.00%d. -4.00%e. 14.004. Mac Inc.’s most recent dividend was $2 per share (D0). The dividend is expected to grow at a rate of 5% per year. The risk-free rate is 2% and the return on the market is 10%. If the company’s beta is 0.9 what is the price of the stock today?a. $50.00b. $48.55c. $47.70d. $51.67e. $52.5636. Jack’s Pet Shop has a cost of debt of 5% a cost of equity of 10% and a cost of preferred stock of 7%. The market capitalization of the common stock is $2 000 000. Preferred stock has a total market value of $1 000 000. The bond issue has a market value of $500 000. The tax rate is 35%. What is the weighted average cost of capital for Jack’s Pet Shop?a. 8.18%b. 9.39%c. 6.66%d. 10.16%e. 8.85%
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