Warm-Up Exercises

All problems are available in MyLab Finance

  1. Learning Goal 3

    E9–1 A firm raises capital by selling $20,000 worth of debt with flotation costs equal to 2% of its par value. If the debt matures in 10 years and has a coupon interest rate of 8% (paid annually), what is the bond’s YTM?

  2. Learning Goal 3

    E9–2 Your firm, People’s Consulting Group, has been asked to consult on a potential preferred stock offering by Brave New World. This 9% preferred stock issue would be sold at its par value of $55 per share. Flotation costs would total $3 per share. Calculate the cost of this preferred stock.

  3. Learning Goal 5

    E9–3 Duke Energy has been paying dividends steadily for 20 years. During that time, dividends have grown at a compound annual ...

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