# Home Work 4_ Finance

Homework Set #4: Chapters 9, 10, & 11Due Week 8 and worth 100 points
Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link above.
A. Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a \$2.50 per share dividend at \$25 a share. The common stock of Bad Boys, Inc. is currently selling for \$20.00 a share. Bad Boys, Inc. expects to pay a dividend of \$1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. Bad Boys, Inc. marginal tax rate is 35%. If Bad Boys, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys cost of capital?
B. If Bad Boys, Inc. raises capital using 30% debt, 5% preferred stock, and 65% common stock, what is Bad Boys cost of capital?
C. On page 457, your textbook details the term Cannibalization. In your own words, identify two corporations that have dealt with cannibalization and what steps were taken to overcome the cannibalization. Please provide any citations and references. Please be articulate in your responses.Attached is the rebric.
homework_4_rubric.pdf

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Points: 100
Criteria
raises capital using
45% debt, 5%
preferred stock, and
50% common stock,
cost of capital?
Weight: 30%
raises capital using
30% debt, 5%
preferred stock, and
65% common stock,
cost of capital?
Weight: 30%
words, identify two
corporations that
have dealt with
cannibalization and
what steps were
taken to overcome
the cannibalization.
citations and
be articulate in your
responses.
Weight: 30%
4. Clarity, writing
mechanics, and
formatting
requirements.
Weight: 10%
Homework Set 4: Chapters 9, 10, and 11
Unacceptable Below
70% F
Fair
70-79% C
Proficient
80-89% B
Exemplary
90-100%A
Did not submit or
incompletely calculated
capital.
Partially calculated
cost of capital.
Satisfactorily
Boys, Inc.’s cost of
capital.
Thoroughly
Boys, Inc.’s cost of
capital.
Did not submit or
incompletely calculated
capital.
Partially calculated
cost of capital.
Satisfactorily
Boys, Inc.’s cost of
capital.
Thoroughly
Boys, Inc.’s cost of
capital.
Did not submit or
incompletely identified
two corporations that
have dealt with
cannibalization and
what steps were taken
to overcome
cannibalization. Did not
submit or incompletely
provided citations and
references.
Partially identified
two corporations
that have dealt with
cannibalization and
what steps were
taken to overcome
cannibalization.
Partially provided
citations and
references.
Satisfactorily
identified two
corporations that
have dealt with
cannibalization and
what steps were
taken to overcome
cannibalization.
Satisfactorily
provided citations
and references.
Thoroughly
identified two
corporations that
have dealt with
cannibalization and
what steps were
taken to overcome
cannibalization.
Thoroughly provided
citations and
references.
More than 6 errors
present
5-6 errors present
3-4 errors present
0-2 errors present

attachment

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