Accountancy, asked by mustafahifza, 2 months ago

Q-No. 04)
Longstre. Communications Services Ltd. has the following capital structure: debt = 25%, preferred
stock -15% and common stock = 60%. The company falls under 40% tax bracket and investors expect earnings
and dividend to grow at a constant rate of 6% in the foreseeable future. The company has currently paid a
dividend of $ 3.70 (D.=3.70) and its stock is currently selling at a market price of $ 60 per share. The following
terms would apply to new security offerings:
Preferred: new preferred stock could be sold to the public at a price of $ 100 per share, with a dividend
of $ 9. Floatation cost of $ 5 would be incurred on new issue.
Debt: debentures could be sold an interest rate of 9%.
Common: new common equity will be raised only by retaining earnings.
Required: 1. Find the component cost of debt, preferred stock and common stock.
2. What is the WACC?​

Answers

Answered by gsp11382
0

Answer:

SECTION -A

1.

A rational number is equivalent to

a)

15

17

b)

25

25

27

10

14

10

27

2.

The zero of the polynomial p(x) = 2x+5 is

a) 2

b)

2

5

Nolor con

c)

5

3.

The polynomial of type ax'+bx+c, when a=0

Linear

b) Quadratic

c) Cubic

Biquadratic

d)

4.

Through which of the following point, the graph of y = -x passes?

(1, 1)

b) (0,1)

c) 61.1

(0,0)

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