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The High Country Water Company (HCWC) has a capital structure of 72% risky debt with a CAPM beta of 0.75 and 28% equity with a CAPM beta of 1.75. The current market value of HCWC is $6700 million, the riskless interest rate is 3% and the market risk premium is 8%. Assume that the corporate tax effects of debt alone approximate the overall tax and non-tax effects. The corporate tax rate is 34%. Given the current riskless and rate and market risk premium, calculate what the appropriate risk-adjused discount rate on HCWC equity would be if HCWC had zero debt. HCWC now announces that it is proposing to undertake a new scale-enhancing investment. In part to reduce its debt level, it will finance the new project entirely with a new equity issue. Ignore flotation costs. The up-front cost of the investment is $680 million. Starting one year hence, the project is expected to return an annual pre-tax cash flow of $250 million for 5 years at which time the project ends. Assume that the project has no liquidation value and no effect on HCWC net working capital requirements. HCWC will be able depreciate the initial investment on a straight-line basis over 5 years. It uses the riskless interest rate to discount the depreciation tax shield.
Review the article "USPlabs Recalls OxyElite Pro Supplements Amid Links to Liver Illness" which can in your weekly reading. This article pertains to a recall of a popular health supplement. Assume you are the manager for the OxyElite Pro Supplemen..
You are working on a calendar year basis and give all raises on january 1. your market position at the beginning of the new plan year is 4.0% below the market.
What is the optimal solution? You should be able to determine this by inspection. If the linear program has multiple optimal solutions, identify the optimal solution set
The annual demand for a product is 180,000 units with a daily standard deviation of demand of 90. The cost to place an order is $750 and holding one unit in inventory costs $15 a year. Lead time is 4 days. A 90% cycle service level is being used. Det..
Describe how you might use emotional intelligence to control mood and create a positive work environment in your branch.
Illustrate what do you think is more important for a good IT professional: strong technical skills or strong people skills.
Calculate the item's EOQ. What is the average time between orders, find the safety stock and reorder point that provide a 95% customer service level
"This organization is running like clockwork!" This statement by a company leader is likely to result in "no change" because (Points : 7) the leader is blinded by the light.
Create a fictional company and develop a memo to communicate the importance of a business continuity plan to the board of directors.
Conduct research using the Argosy online library, your text book and the Internet regarding the differences in culture, management styles, and communication strategies between the U.S. and Cambodia. Analyze at least three potential management con..
Sequence the jobs shown below by using the Gantt chart. Assume that the move time between machines in one hour. Sequence the jobs in priority order 1,2,3,4.
According to the intensive distribution strategy, a consumer should not have to go beyond the nearest store to buy the product. Which products are best suited for an intensive distribution strategy and why? How does this influence your brand loyalty ..
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