Thurman Industries plans to issue a $100 par perpetual preferred stock with a fixed annual dividend of 11 percent of par.  It would sell for $94.60, but flotation costs would be 10 percent of the market price.  What is the percentage cost of preferred stock after taking flotation costs into account?

Kiev Corporation’s outstanding bonds have a $1,000 par value, a 13 percent semiannual coupon, 8 years to maturity, and an 8 percent yield to maturity (YTM).  What is the bond’s price?

Loyd & Associates’ common stock currently trades at $45 a share.  It is expected to pay an annual dividend of $1.35 a share at the end of the year (D1 = $1.35), and the constant growth rate is 9.1 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

Susan recently received a credit card with a nominal interest rate of 22 percent.  With the card, she purchased some new clothes for $275.  The minimum payment on the card is only $20 per month.  If Susan makes the minimum monthly payment and makes no other charges, how long will it be before she pays off the card?

A firm’s bonds have a maturity of 25 years with a $1,000 face value, a 12 percent semiannual coupon, are callable in 7 years at $1,100, and currently sell at a price of $1,167.  What is their yield to call (YTC)?

What is the present value of an annuity due that pays $1,100 per year for 8 years, assuming the annual discount rate is 4 percent?

Leslie Foods is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $7 million 10.5% High Y   5 million   8.5% Average Z   4 million   8.5% Low Leslie’s WACC is 10 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects.  Which project(s) should Leslie accept assuming it faces no capital constraints?

A firm with a 13 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$14,000 $5,000 $5,200 $6,700 $5,500 Calculate the project’s discounted payback period.

What is the present value of a perpetuity that pays $1,500 per year if the discount rate is 8.5 percent?

Suppose you invest $3,200 today in an account that earns a nominal annual rate (inom) of 12 percent, with interest compounded monthly.  How much money will you have after 10 years?