Free Project Dissertation Example

5
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Category: Accounting
Subcategory: Business
Level: University
Pages: 3
Words: 825
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Student’s Name Professor’s Name Course Date Case Analysis:  The Case of the Junior Analyst Cost of debt Tax rate of the firm = 38% The coupon rate of bond = 7% Cost of debt = Coupon rate of the bond (1-tax rate)                       = 7% (1-0.38)                      = 7% (0.62)                      =4.34% Cost of preferred stock Cost of Preferred stock = Dividend/ current market price Dividend = $8.5 Current market price = $104                                       = $ 8.5 / $ 104                                      = 8.17% 3) Cost of common equity Using the CAPM approach Current risk-free return offered is 2.1% Market portfolios return is 9.5%, beta = 1.25. Cost of equity = Risk free return + Beta (Market return - risk free return)                        = 2.1% + 1.25 (9.5% - 2.1%)         ...

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