Company abc wants to invest in a swedish manufacturing

Assignment Help Finance Basics
Reference no: EM13480301

Company ABC wants to invest in a Swedish manufacturing company that has an optimal debt ratio of 60%. Company ABC's cost of equity capital is 16% and its before-tax borrowing rate is 12.3%. As the CFO of ABC, you have to justify the profitability of this investment.

Your Task: Given a marginal tax rate of 45%, calculate:

The weighted average cost of capital (WACC)

The cost of equity for an equivalent all-equity financed firm

Reference no: EM13480301

Questions Cloud

A lawn care company started business on january 1 2012 the : a lawn care company started business on january 1 2012. the company billed clients 105000 for lawn care services
Silky smooth lotions come in three sizes 4 8 and 12 ounces : silky smooth lotions come in three sizes 4 8 and 12 ounces. the following table summarizes the selling prices and
The company also collected accounts receivable of 53400 and : during 2011 lavina corporation had cash and credit sales of 94000 and 91000 respectively. the company also collected
Write an essay of 1000 -10 words about the following below : essay task questionwrite an essay of 1000 -10 words about the following below is a list of ten people who are leaders
Company abc wants to invest in a swedish manufacturing : company abc wants to invest in a swedish manufacturing company that has an optimal debt ratio of 60. company abcs cost
Wagner inc had a beginning cash balance of 14000 on january : wagner inc. had a beginning cash balance of 14000 on january 1 2011. during january the company recorded debits of
Net present value npv and adjusted present value apv are : net present value npv and adjusted present value apv are two methods of calculating share value.create a powerpoint
Balcom corporation acquires a coal mine at a cost of : balcom corporation acquires a coal mine at a cost of 1500000. intangible development costs total 360000. after
Why is accrual-basis accounting acceptable for most : distinguish between cash-basis accounting and accrual basis accounting. why is accrual-basis accounting acceptable for

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the current value per share of shara miselle stock

Shara Miselle Co. just paid a dividend of $1.65 (D0) on its common stock. This company's dividends are expected to grow at a constant rate of 3% indefinitely. if the required rate of return on this stock is 11%, compute the current value per share..

  Monitoring the financial situation

What happen if financial projections based on incorrect data? For example, if your booked accounts receivable is significantly higher than actual accounts receivable & cash inflows, does your expense budgeting change?

  What would be the firm new receivables balance

If the electronic claims system costs $30,000 a year to lease and operate, should it be adopted? (Assume that the entire receivables balance has to be financed)

  Find the overall pre-tax and after-tax cost of debt

Find the overall pre-tax and after-tax cost of debt for a company with the following bonds. The tax rate is 35%.

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  You need to find alice 3 stocks to invest in from different

you need to find alice 3 stocks to invest in from different segments of the market. the stocks should come from 3

  Find company stocks current price

A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5 percent, and the expected constant growth rate is g = 6.4 percent.

  What will be the approximate expected cash flow

What will be the approximate expected cash flow in year 5, if the project has an Internal Rate of Return of 6%?

  Calculate next year ending receivables balance

Receivables are currently $15M on credit sales of $120M Credit sales are expected to grow by 20% next year. Calculate next year's ending receivables balance (make calculations using ending balances and a 360 day year).

  Calculate future value of income

Tina, age fifty is an accountant. She earns $50,000 a year. After consulting with you, she concludes that she can live on 70 percent of her current salary if she were to retire today.

  What is globalization why has globalization become so

1.what is meant by foreign exchange risk? what specific problems does foreign exchange present in an organization? how

  The cigarette industry is subject to litigation for health

the cigarette industry is subject to litigation for health hazards posed by its products. the industry has been

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd