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Midwest Electric Company (MEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 10% as long as it finances at its target capital structure, which calls for 50% debt and 50% common equity. Its last dividend was $2.50, its expected constant growth rate is 5%, and its common stock sells for $30. MEC's tax rate is 40%. Two projects are available: Project A has a rate of return of 13%, while Project B's return is 8%. These two projects are equally risky and also about as risky as the firm's existing assets.
a. What is its cost of common equity? Round your answer to two decimal places.______ %
b. What is the WACC? Round your answer to two decimal places.______ %
The Sanchez Company has decided to invest in a new capital budgeting project that will require a net investment of $450,000. This project is expected to generate annual operating cash flows
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Compute the depreciation amount in the third year and the BV at the end of the fifth year of life by each of these methods
Main basis for optimum mix of debt also equity in a company is generation of cash flow from investing activities of firm or company. Explain
As an operations analyst for your company, you have been asked to find an improvement that will increase the productivity of your company. Your boss is demanding a 25% increase in productivity, you have two option to choose from:
Sales of music stands at Jonny Ho's music store in Columbus over the past 10 weeks are shown in the table below.
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Rochester Manufacturing Corporation (RMC) is considering moving some of its production from tranditional numerically controlled machines to a flexible manufacturing system (FMS).
Storing this paper requires a specialized facility and holding costs are 32%. Assume a lead time of 1 week and that re are 250 working days in a year. Illustrate what order quantity minimizes my total inventory costs.
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Include a SWOT analysis of your product as it compares to the 3 competitors and state where the product currently are in the product life cycle.
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