The Graber Corporation’s common stock has a beta of 1.15. If the risk-free rate is 3.5% and the expected return on the market is 11%, determine the company’s cost of equity capital.

J&M Corporation common stock has a beta, $b$, of $1.2$. The risk-free rate is $6 \%$, and the market return is $11 \%$. a. Calculate the risk premium on J&M common stock.

West Corp. issued 25-year bonds two years ago at a coupon rate of 5.3 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?

The Absolute Zero Co. just declared a dividend of $3.40 per share on its common stock. The company is expected to maintain a constant 4.5% growth rate in its dividends indefinitely. If the stock sells for$53 a share, what is the company’s cost of equity?

A 17-year, $\$1,000$ par value zero-coupon rate bond is to be issued to yield 7 percent. What should be the initial price of the bond? (Take the present value of $\$1,000$ for 17 years at 7 percent.)

An investment project has annual cash inflows of $6,000,$7,100, $7,900, and$9,200, and a discount rate of 16 percent.

Required: What is the discounted payback period for these cash flows if the initial cost is $9,500?

Calculate the portfolio weights for a portfolio that has 135 shares of Stock A that purchase for $48 per share and 165 shares of Stock B that purchase for$29 per share.

Cost of common stock equity: CAPM J&M Corporation common stock has a beta, $\beta$, of 1.2. The risk-free rate is 6 %, and the market return is 11%. a. Determine the risk premium on J&M common stock.

Cash versus stock dividend Milwaukee Tool has the following stockholders’ equity account. The firm’s common stock currently sells for $4 per share.

a. Show the effects on the firm of a cash dividend of $0.01,$0.05, $0.10, and$0.20, per share.

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Assume a German company issues a bond with a par value of Euro 1,000, 23 years to maturity, and a coupon rate of 5.8% paid annually. If the yield to maturity is 4.7%, what is the current price of the bond?

Volbeat Corp. provided the following information on its 2015 income statement: sales = $267,000; costs =$148,000; other expenses = $8,200; depreciation expense =$17,600; interest expense = $12,400; taxes =$32,620; dividends = $15,500. In addition, you’re told that the firm issued$6,400 in new equity during 2015 and redeemed $4,900 in outstanding long-term debt.

a. What is the 2015 operating cash flow?
b. What is the 2015 cash flow to creditors?
c. What is the 2015 cash flow to stockholders? d. If net fixed assets increased by$25,000 during the year, what was the addition to NWC?

Mullineaux Corporation has a target capital structure of 70% common stock, 5% preferred stock, and 25% debt. Its cost of equity is 11%, the cost of preferred stock is 5%, and the pretax cost of debt is 7%. The relevant tax rate is 35%.

a. What is Mullineaux’s WACC?
b. The company president has approached you about Mullineaux’s capital structure. He wants to know why the company doesn’t use more preferred stock financing because it costs less than debt. What would you tell the president?

Chevelle, Inc., has sales of $39,500, costs of$18,400, depreciation expense of $1,900, and interest expense of$1,400. If the tax rate is 35 percent, what is the operating cash flow, or OCF ?

Secolo Corporation stock currently sells for $68 per share. The market demans a return of 11% on the firm’s stock. If the company keeps a constant 3.75% growth rate in dividends, what was the most recent dividend per share paid on the stock?