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Eagle Sports Products (ESP) is considering issuing debt to raise funds to finance its growth during the next few years. The amount of the issue will be between $35 million and $40 million. ESP has already arranged for a local investment banker to handle the debt issue. The arrangement calls for ESP to pay flotation costs equal to 7 percent of the total market value of hte issue.
a. compute the flotation costs that ESP will have to pay if the market value of hte debt issue is $39 millionb. If the debt issue has a market value of $39 million, how much will ESP be able to use for its financing needs? That is, what will be the net proceeds from the issue for ESP? assume that the only costs associated with the issue are those paid to the investment banker.c. If the company needs $39 million to finance its future growth, how much debt must ESP issue?
What are the PV and FV of a 10-year ordinary annuity of $500 at 10% and PV and FV of the same annuity if it bacomes an annuity due?
If Touring Enterprises were to increase the percentage of debt in its capital structure, what would happen to the WACC ? No calculation is necessary- simply provide a short, non-numeric response.
The Lo Sun Corporation offers a 5.3 percent bond with a current market price of $858.50. The yield to maturity is 6.29 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?
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What will the value of the firm be if the company takes on debt equal to 100 each cent of its unlevered value?
Compute the marginal cost of capital on the additional $150 million assuming the cost of debt stays the same.
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Johnson & Williams have approached you to obtain funding for the proposed expansion of their manufacturing capacity and product range.
I am a man trying to get muscular; help me to write about how I am going to get in shape to be muscular in the next 2-years by working on my arms, legs and stomach.
If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180 day forward rate is 5.97 shekels each dollar, then the forward rate for Israeli shekel
Which business structure would you select if you were to set up your own CPA practice: a partnership, proprietorship, or corporation? Why? Explain what factors affect your decision.
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