Business > SOLUTIONS MANUAL > San Jose State UniversityBUS 170Quiz_Ch_10_Solution (All)
San Jose State UniversityBUS 170Quiz_Ch_10_Solution
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Quiz Ch 10 Solution (3 points) 1. WACC and Optimal Capital Budget (2 points) Adams Corporation is considering four average-risk projects with the following rates of return: Project Cost Expected R... ate of Return 1 $2,000 14.00% 2 3,000 13.00% 3 5,000 12.75% 4 2,000 11.50% Adams Corporation just issued 10-year bonds that pay a 9.8% semiannual coupon. The bonds have a price of $987.54 and a par value of $1,000 It can issue preferred stock with dividend of $5 per year at $50/share The current common stock price is $36/share and the last dividend paid was $2.40. Dividends are expected to grow at a constant rate of 6.0% per year The risk premium, RP, of the stock over its cost of debt is 3.5% [Show More]
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