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Mr. Williams is purchasing an entire bottling plant for $42,500,000. He has a tax rate of 35 percent.
He has a contract to bottle for SNAP-ON ICE TEA. The break- even numbers of the factory are good and Bonika Financial has calculated the IRR of the deal at 22%. The capital structure of Mr. Williams new bottling plant is as follows: $10,000,000 in equity at 6%, a preferred investors owns 100,000 shares of $25 each that pays a dividend of $5 annually. The rest of the capital structure is financed with debt which carries an annual interest expense of $3,000,000.
Calculate the WACC of the bottling plant.
Suppose a stock had an initial price of $62 per share, paid a dividend of $1.10 per share during the year, and had an ending share price of $74. What was the dividend yield and the capital gains yield?
Rimsa Savings is a savings institution that provided Carson Company with a mortgage for its office building. Rimsa recently offered to refinance the mortgage if Carson Company will change to a fixed-rate loan from an adjustable-rate loan.
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The Wheel Deal Inc., a company that produces scooters and other wheeled non-motorized recreational equipment is considering an expansion of their product line to Europe. The expansion would require a purchase of equipment with a price of €1,200,000 a..
A company is considering two alternative methods of producing a new product. The relevant data concerning the alternatives are presented below. Alternative I ?II Initial investment $64,000 $120,000 Annual receipts $50,000 $60,000 Annual disbursements..
Erna Corp. has 7 million shares of common stock outstanding. The current share price is $86, and the book value per share is $5. Erna Corp. also has two bond issues outstanding. The first bond issue has a face value of $70 million, has a coupon rate ..
You need a 25-year, fixed-rate mortgage to buy a new home for $255,000. Your mortgage bank will lend you the money at a 5.5 percent APR for this 300-month loan. However, you can only afford monthly payments of $950, so you offer to pay off any remain..
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