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WACC and Percentage of Debt Financing
Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 9%, and its common stock currently pays a $3.75 dividend per share (D0 = $3.75). The stock's price is currently $33.00, its dividend is expected to grow at a constant rate of 7% per year, its tax rate is 35%, and its WACC is 14.25%. What percentage of the company's capital structure consists of debt? Round your answer to two decimal places.
%
Bruer, Inc., is expected to maintain a constant 5.30 percent growth rate in its dividends, indefinitely. Required: If the company has a dividend yield of 3.80 percent, what is the required return on the company’s stock?
Thatcher Corporation's bonds will mature in 10 years. The bonds have a face value of $1000 and an 8% coupon rate, paid semiannually. The price of the bonds is $1100. The bonds are callable in 5 years at a call price of $1050. What is their yield to m..
Your car dealer is willing to lease you a new car for $399 a month for 60 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 5.0 percent, what is the current value of th..
Bond Yield and After-Tax Cost of Debt A company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $614.24. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component..
Should you invest if this is the only project under consideration?
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The Utah Mining Corporation is set to open a gold mine near Provo, Utah. According to the treasurer, Monty Goldstein, "This is a golden opportunity." The mine will cost $3, 500,000 to open and will have an economic life of 11 years. What is the IRR f..
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Tony and Franzi, after graduating from the DMBA program, decide to launch a venture "Likable Lunches." To do this, Franzi would need to invest $1,000 at t=0 for the ingredients and menu development for these lunches. There's a 50-50 chance of strong ..
Why is it important to make the distinction between company opportunity cost of capital and project opportunity cost of capital
what is your best guess as to the rate of return on the stock?
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