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1. A firm has an equity beta of 1.1. The expected market risk premium is 6%. T-bills currently pay 4%. The firm has two bond issues outstanding. The first currently sells for 102.23% of par and has a yield to maturity of 6%. Par value of bond issues is $2,500. The second has a current market price of 99.47% of par with a yield to maturity of 8%. There are 300,000 outstanding bonds in the first issue and 100,000 in the second. The firm’s equity has a current market price of $40 and there are 6 million shares outstanding. What is the firm’s WACC if the relevant tax rate is 37%?
2. Last year Hot Shots Exterminators, Inc. conducted an IPO, issuing 1 million common shares with a par value of $1 to investors at a price of $10 per share. During its first year of operation, Hot Shots earned a net income of $0.15 per share and paid a dividend of $0.01 per share. At the end of the year, the company's stock was selling for $20 per share. Construct the equity accounts for Hot Shots at the end of its first year in business, and calculate the firm's market capitalization.?
3. Couglin Inc. has net operating income of $120000 per year. Couglin uses no debt in its capital structure and the required rate of return to equity holders is 12 percen
A) Calculate the value of the unlevered firm if the firm has a marginal tax rate of 0%.
B) Calculate the value of the unlevered firm if the firm has a marginal tax rate of 30%.
Explain the application of e-commerce risk on these companies and how they can manage the risk.
Find the present value of an annuity of $2000 per year at the end of each of 8 years after being deferred for 5 years, if money is worth 5% compounded annually. (Round your answer to the nearest cent.)
If you contribution the maximum currently allowable in a 401(k) plan per year at the end of each year (only your contribution,
Calculate the company's net operating profit after taxes (NOPAT).
What is your opinion regarding a valuation for the assets of Mr. Lube, and, therefore, was this a fair price for the transaction?
What is the effective annual rate (EAR) of this warehousing arrangement?
The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 14%. What is stock's current value per share.
It has been suggested that the short-term interest rate r follows the stochastic process. - What is the process followed by the variable Sn ?
BDJ Co. wants to issue new 22-year bonds for some much-needed expansion projects. The company currently has 8.7 percent coupon bonds on the market that sell for $1,127, make semiannual payments, have a $1,000 par value, and mature in 22 years. What c..
(Loan amortization) On December 31, Son-Nan Chen borrowed $110,000, agreeing to repay this sum in 24 equal end-of-year instalments and 18 percent interest on the decling balance. How large must the annual payments be?
The target cash balance is reached when:
calculate operating cash flow. Net sales =$4200, cost of goods sold= $2650, operating expenses= $580, depreciation =$610,
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