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You are given the following information concerning Parrothead Enterprises:
Debt: 9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5. These bonds pay interest semiannually.
Common stock: 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .91 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely.
Preferred stock: 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share.
Market: An expected return of 11.4 percent, a risk-free rate of 5.05 percent, and a 34 percent tax rate.
Calculate the WACC for Parrothead Enterprises.
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Tiptop Farms expenses were equal to $320,000. Tiptop had interest expenses of $80,000 and depreciation expenses of $75,000 during the year.
You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machine’s base price is $10,900.00, and it would cost another $1,970.00 to install it. What is the initial cash outla..
A perpetual stream of annual payments starting at $500 in one year and increasing at 5% per year thereafter.
How does this technique compare to discounted cash flow valuation when based on either net income or dividends?-
Compute the current stock price. If you wish to have an equal dividend in the next two years, how will you achieve that through homemade dividends?
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