24 Assume that youdeposit $10,000 today ito an account paying the acoount at sne

Question

24 Assume that youdeposit $10,000 today ito an account paying the acoount at sne end e s eave it on depoeit for exactly 8 years a How much will be in (a) Annuaily (c) Montly n interest is compounded 25tf you invest a lump sum, of S2.750 today in an account that pays e% anual interest and bave the funds on deposit for exactly 15 years what is future vilue? (HINT: PMT-o Solve for FV) 20. Itf you invest $1,200 at the end of each year for the next 10 years in an account that pays 10% annual interest, determine the future value at the end of year the 27 Make the same investment as in investment in problem 26 but place the $1,200 in account at the beginning of each year J Ross and Sons, Inc has a target capital structure that calls for 40% debt, 10% preferred stock and 50% common equity The firms current after-tax cost of debt is 6% and it can sell as much debt as it wishes at this rate. The firm's preferred stock currently seils for $00 a share and pays a dividend of $10 per share, however, the firm will only net $80 per share from the sale of the new preferred stock. Ross expects to retain $15,000 in earnings over the next year. Ross common stock currently sells for $40 per share, but the firm will only next $34 per share from the sale of the new common stock The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend t a. What is the Cost of Capital for Preferred Stock? b. What is the cost of capital for Common Stock?

Explanation / Answer

24.

question information looks unclear due to small font, however, I guess i got it correctly as deposit is of 10,000 at 6% annual interest for 8 years

(a) amount after 8 years=10000*1.06^8=15938.48

(b) amount after 8 years=10000*(1+(6%/2))^(8*2)=16047.06

(c) amount after 8 years=10000*(1+(6%/12))^(8*12)=16141.43

the above are the answers using Future value formula=PV*(1+r)^t

we do only one question based on chegg rule

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