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The following table gives Foust Company's earnings per share for the last 10 years. The common stock, 9.0 million shares outstanding, is now (1/1/17) selling for $68 per share. The expected dividend at the end of the current year (12/31/17) is 60% of the 2016 EPS. Because investors expect past trends to continue, g may be based on the historical earnings growth rate. (Note that 9 years of growth are reflected in the 10 years of data.) Year EPS Year EPS 2007 $3.90 2012 $5.73 2008 4.21 2013 6.19 2009 4.55 2014 6.68 2010 4.91 2015 7.22 2011 5.31 2016 7.80 The current interest rate on new debt is 11%; Foust's marginal tax rate is 40%; and its target capital structure is 40% debt and 60% equity. Calculate Foust's after-tax cost of debt. Round your answer to two decimal places. % Calculate Foust's cost of common equity. Calculate the cost of equity as rs = D1/P0 + g. Round your answer to two decimal places. Do not round your intermediate calculations. % Find Foust's WACC. Round your answer to two decimal places. Do not round your intermediate calculations. %
Beginning three months from now, you want to be able to withdraw $4,000 each quarter from your bank account to cover college expenses over the next four years. Required: If the account pays .8 percent interest per quarter, how much do you need to hav..
Conduct a survey of at least five people in your organization. The five people (preferably more) should be from different departments of your organization and preferably at different levels of seniority. What is your definition of risk? What is your ..
Bronco Corp. has decided to establish a subsidiary in Taiwan that will produce stereos and sell them there. It expects that its cost of producing these stereos will be one third the cost of producing them in the United States. Assuming that its produ..
Explain why it is a chosen strength or weakness and the impact it has on global presence and expansion for the corporation.
Which of the following represent key differences between private mortgage insurance and FHA mortgage insurance?
Explain why the market equilibrium might involve either a low price for airplanes or a high price for airplanes- From the perspective of the well-being of the United States (or Europe), why might a high-price equilibrium be desirable?
what is the current cost of common equity for the firm and what does the firm believe is a more appropriate cost of common equity for the firm?
Shares of Shot Donuts common stock are currently selling for $15. Next year’s dividend is expected to be $1.50 per share and the market rate of return is 10%. At what rate is the dividend projected to be growing?
Discuss which financial management practices are most effective in creating and monitoring an operating budget.
Firm H's shares sell today for $62 and are forecast to be priced at $77.50 and to pay a dividend of $1.80 at the end of one year. Firm H's beta is 0.80, the market risk premium is 5.5%, and the riskless return is 2%. The expected return less the requ..
what interest rate should be applied to the monthly cash flows when calculating present worth of project in percentage terms with 4 digits after decimal point
Calculate the foreign currency risk premium from the Swiss investor's perspective and explain.
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