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TDJ Corp. needs $6.4 million in capital for its new state-of-the-art manufacturing facility. The current financing plan is 45% equity capital and 55% debt financing. Compute the WACC based on the following scenario if the company's effective income tax rate is 37.5%. Debt Financing: 47% of the amount will be obtained through a bank loan at 10.6% per year and the remaining amount will be obtained through an issue of corporate bonds at a bond rate of 11.7% per year. Equity Financing: 25% of the amount will be obtained through the issue of common stock that pays a dividend of 4.8% per year and 36% of the amount will be obtained through the issue of preferred stock that pays a dividend of 11.2% per year. The remaining amount will be taken from retained earnings that earn a rate of 7.5% per year.
If the spot rate for the Japanese yen is $0.0092 per Japanese yen and the 3-month forward rate is $0.0093 per Japanese yen, what is the annualized premium (discount) for the 3-month forward quote on the Japanese Yen, i.e., the annualized Japanese Yen..
What undesirable macroeconomic phenomenon is associated with a sharp economic expansion?
What will be the value of the investment in two years?
What is unsystematic risk and how can it be eliminated? If Boeing’s reward-to-risk ratio exceeds the market risk premium, what are the implications?
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer’s base price is $1,080,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold af..
A market value weighted index has three stocks in it, call them A, B, and C, priced at 82, 63, and 47 per share. Each firm has 376, 159 and 146 thousand shares outstanding, respectively. The value of the index at close of trading day is 944. What is ..
What is the company's expected growth rate? what portion of its net income is the firm expected to pay out as dividends?
Cost of debt using both methods: Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates, the bonds can be sold for $1,010 each; flotation costs of $30 p..
How does this affect the average age of the inventory (AAI), the operating cycle (OC), and the cash conversion cycle?
What is the Effective Rent (under 10% discount rate assumption) for a 7-year net lease with rent fixed at $22/SF, in which the landlord agrees to give the tenant one year free rent up front and to pay for $10/SF worth of tenant improvements?
A company enters into a total return swap where it receives the return on a corporate bond paying a coupon of 5% and pays LIBOR. Explain the difference between this and a regular swap where 5% is exchanged for LIBOR. Please explain in detail
A7X Corp. just paid a dividend of $1.30 per share. The dividends are expected to grow at 16 percent for the next eight years and then level off to a growth rate of 5 percent indefinitely. If the required return is 11 percent, what is the price of the..
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