37．An analyst gathered the following information about a company: Target (optimal) capital structure: |
| Long term debt | 50% | Preferred Stock | 10% | Common Equity | 40% | After tax component costs: |
| Long term debt | 6% | Preferred Stock | 10% | Retained earnings | 14% | New common stock | 15% | Expected total earnings (net income) for the year in millions | $120 | Target dividend payout ration | 45% |
If the company raises $150 million in new capital, the company抯 marginal cost of capital is closest to:
Select exactly 1 answers from the following: A. 9.6%. B. 10.0%. C. 14.0%. D. 15.0%.
答案和详解如下！
Feedback: Correct answer: A
Fundamentals of Financial Management, 8th edition, Eugene F. Brigham and Joe F. Houston (Dryden, 1998), pp. 364?69 2006 Modular Level I, Vol. III, pp. 46-50 Study Session 11-46-c define target (optimal) capital structure, calculate a company抯 weighted-average cost of capital, calculate a company抯 marginal cost of capital and distinguish between the weighted-average cost of capital and marginal cost of capital
Given the company抯 dividend payout ratio, the amount of the expected addition to retained earnings is $66 million; the amount of new capital that could be raised without issuing new common stock is $165 million. Because $150 million is less than the break point for retained earnings, the component cost of equity is the cost of retained earnings. The marginal cost of capital for the company is 9.6 percent: (0.5 x 6%) + (0.1 x 10%) + (0.4 x 14%).
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发表于 2006-11-22 11:03
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