A stock paying $5 in annual dividends sells one year from now for $85 and has an expected return of 25%. What would be the stock price today?
A) $63 B) $72 C) $80 D) $90
You are analysing the after-tax cost of debt for a company. You know that the company’s 12-year maturity, 9.5 per cent coupon bonds are selling at a price of $1,200. If these bonds are the only debt outstanding for the company, what is the after-tax cost of debt for this company if the corporate tax rate is 30 per cent? What if the bonds are selling at par?
Please show me all Formulas and processes of calculation.