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Pet, com can issue 10-year bond that pays 5% coupon rate with $1,000 par value, and the coupons are paid semi-annually

Finance Dec 22, 2020

Pet, com can issue 10-year bond that pays 5% coupon rate with $1,000 par value, and the coupons are paid semi-annually. The bond is priced at $980 when first issued. If the company's marginal tax rate is 30%, its after-tax cost of debt is closest to O 3.68% O 5.26% O 1.84% O 2.63%
Noble Tech is expected to pay a dividend of $1.50 one year from today on its common stocks. That dividend is expected to increase by 2% per year thereafter. If Noble Tech's stock price is $20, then company's cost of common equity capital is closest to O 9.5% O 7.5% O 5.5% O 10.5%
Which of the following statements is NOT true? O Modern venture capital firms tend to specialize in a specific line of business, such as hospitality, food manufacturing, or medical devices. O Venture capitalists' sole function is to provide financing for new firms. O Venture capitalists bear a substantial amount of risk when they fund a new business. O A significant number of venture capital firms focus on high-technology investments.

Expert Solution

1.
=RATE(10*2,5%*1000/2,-980,1000)*2*(1-30%)
=3.6818%

2.
=1.50/20+2%
=9.5000%

3.
Venture capitalists' sole function is to provide financing for new firms

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