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Finance Question? I really need some help on this!!!!?


The following tabulation gives earings per share figures for the Foust Company durining the preceeding 10 years. The firm's common stock, 7.8 million shares outstanding, is now (1/1/03) selling for $65 per share, and the expected dividend ar the end of the current year (2003) is 55 percent of the 2002 EPS. Because investors expect past trends to continue, g may be based on teh earnings growth rate. ( note that 9 years of growth are reflected in the data).
year EPS
1993 $3.90
1994 4.21
1995 4.55
1996 4.91
1997 5.31
1998 5.73
1999 6.19
2000 6.68
2001 7.22
2002 7,80
The current interest rate on new debt is 9 percent. The firms marginal tax rate is 40 percent. It capital structure, considered to be optimal, is a follows:
Debt $104,000,000 Common equity 156,000,000
Total liabilities and equity 260,000,000

1. Calculate after-tax cost of new debt and common equity. Calculate the cost of equity as ks = D1/P0 + g.
2. What would Foust鈥檚 weighted average cost of capital be?

Isn't this more of a math question that should be asked in homework help or Science & Math. category?

Your out of your realm . Put your money someplace where you know what is going on . Evidentley you don't know what it's all about . Growth really doesn't mean a **** if is doesn't reflect on the income from your investment . You better talk to a financial consultant who can explain things to you as you surely don't know what it's all about . Don't try to act intellegent if your not .

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