Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
LilyMac Studios, a national chain of photography studios, is considering opening up a chain of coffee shop/ art galleries. While the existing operations of the firm have a beta of 1.17, the new chain is expected to have a beta of 0.8. LilyMac currently has 500,000 shares of common stock outstanding, which are selling for $ 63.72 per share, with annual dividends on common shares of $5.00/share, and dividends growing at 6.00% annually for an indefinite period of time. Also LilyMacy has a $ 10 million bond issue, selling at 104 percent of par. The expected market risk premium is 6 percent, and the current risk- free rate is 5.5 percent. The bonds pay an 8 percent semiannual coupon and mature in 20 years. Determine the cost of equity with flotation costs using the simple average of equity cost determined on the basis of the constant growth method and CAPM.
The current operations of the firm produce EBIT of $ 18 million per year, and the chain’s operations are expected to add $ 25 million per year to that. The new chain will be funded with 65 percent equity and 35 percent debt, and estimated flotation costs are expected to be 12 percent and 5 percent, respectively. What should be the WACC for the new chain of coffee shops?
You buy a government bond that pays interset twice a year. The interset payment is $300 each six months. The bond matures in six years. The face value of the bond is $10,000. The annual market interset rate is 6 percent.
A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 3 mpg of gasoline. The extra cost of a CVT is $850 on the sticker price of a new car. For a particula..
Five years ago, Highland, Inc. issued a corporate bond with an annual coupon of $7,000, paid at the rate of $3,500 every six months, and a maturity of 25 years. The par (face) value of the bond is $1,000,000. Recently, however, the company has run in..
You want to buy a car, and a local bank will lend you $30,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 11% with interest paid monthly. What will be the monthly loan payment? What will be the lo..
A 25-year maturity bond with par value $1,000 makes semi-annual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $960.
Suppose you purchase a 30-year Treasury bond with a 7% annual coupon, initially trading at par. In 10 years time the bond's yield to maturity has risen to 8% (EAR). (Assume $100 face value bond) If you sell the bond now, what internal rate of return..
A U.S. Treasury bill with 89 days to maturity is quoted at a discount yield of 4.17 percent. What is the bond equivalent yield?
The Beach House has sales of $790,000 and a profit margin of 7 percent. The annual depreciation expense is $80,000. What is the amount of the operating cash flow if the company has no long-term debt?
Assume investors expect a 2.0 percent real rate of return over the next year. If inflation is expected to be 0.5 percent, what is the expected nominal interest rate for a one-year U.S. Treasury security?
Stock A has an expected return of i4% and a standard deviation of 35%. Stock B has an expected return of 20% and a standard deviation of 65%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invest..
Most US corporate bonds are investment grade. Most US corporate convertible bonds are investment grade. Investors react negatively (i.e., a
Evaluate the profitability of Jackson relative to that of the average firm in its industry. Perform a DuPont analysis for Jackson. What areas appear to have the greatest need for improvement?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd