Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. BEA is a zero-growth firm and pays out all of its earnings as dividends. The firm's EBIT is $14.933 million, and it faces a 40% federal-plus-state tax rate. The market risk premium is 4%, and the risk-free rate is 6%. BEA is considering increasing its debt level to a capital structure with 40% debt, based on market values, and repurchasing shares with the extra money that it borrows. BEA will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 9%. BEA has a beta of 1.0.
a) What is BEA's unlevered beta? Use market value D/S (which is the same as wd/ws) when unlevering.
b) What are BEA's new beta and cost of equity if it has 40% debt?
c) What are BEA's WACC and total value of the firm with 40% debt?
The optimal portfolio:
Municipal bonds are currently offering investors a 6% return and corporate bonds with the same maturity and default risk are offering investors an 8% return. What is the after-tax return on municipal bonds for an investor in the 30% tax bracket?
What is the present value of the following uneven cash flow stream −$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually. 2. Suppose that on January 1 you deposit $100 in an account that p..
americas current account ca deficit the trade deficit plus net income payments and netunilateral transfers rose as a
Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $54.50 per share with an annual dividend of $4.50 a share. Ignoring flotation costs, what is the company's cost of preferred stock, rps? Round your answer to two decimal pl..
Sixty years ago, your grandparents opened two savings accounts and deposited $200 in each account. The first account was with City Bank at 3 percent, compounded annually. The second account was with Country Bank at 3.5 percent, compounded annually. W..
What recommendations do you have for employees with a current profile similar to Tom’s after seeing the impact of the uncertainty in the annual salary growth rate and the annual portfolio growth rate? Discuss how the financial planning model develope..
introductionmany believe that business entities should have an ethical duty to be socially responsible to work towards
Consider a palletizer at a bottling plant that has a first cost of $162,000, operating and maintenance costs of $18,900 per year, and an estimated net salvage value of $27,000 at the end of 30 years. Assume an interest rate of 8%. What is the annual ..
You are evaluating two annuities. They are identical in every way except that one is an ordinary annuity and the other is an annuity due. Which of the following is FALSE?
A thirty year corporate bond with twelve years remaining till maturity is currently selling for $ 1,088. The market rate of interest for a similar bond is 5.75%. What is the coupon (stated or contract) rate of interest?
You will receive $7,500 three years from now. The discount rate is 12 percent. What is the value of your investment one year from now?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd