DMBA620 Week 5 Homework 5

BUY HERE: DMBA620 Week 5 Homework 5 – Homeworkmade

DMBA620 Week 5 Homework 5

1	The corporate treasurer of Ajax Company expects the company to grow at 4% in the future, and debt securities
	at 6% interest (tax rate = 30%) to be a cheaper option to finance the growth. The current market price per share
	of its common stock is $39, and the expected dividend in one year is $1.50 per share. Calculate the cost of the company’s
	retained earnings and check if the treasurer’s assumption is correct.

The risk-free rate on 10-year U.S. Treasury bills is 3% and the expected rate of return on the overall stock market is 11%.
The company has a beta of 1.6. What is the cost of equity?

A company has a capital structure as follows:

Required rate of return is 10%.

10%

A corporate bond has a face value of $1,000 and an annual coupon interest rate of 7%. Interest is paid annually.
10 years of the life of the bond remain. The current market price of the bond is $872. To the nearest whole percent,
what is the yield to maturity (YTM) of the bond today?