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Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $16.50 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?
Friendly Finance is offering a special on one-year loans. The company will loan you $5,000 today in exchange for one payment of $5,700 one year from now. What is the APR on this loan
Company X has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding.
If the returns required by investors are 10 percent, 13 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC. Assume that the firm's marginal tax rate is 40 percent.
he bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,063.49, what is the yield that Trevor would earn by selling the bonds today
Unearned revenue of $78,000 is included as a current liability even though only two-thirds will be earned in 2014. Determine the appropriate amount and classification of each of the following items (in order of liquidity).
You are hoping to buy a house in the future and recently received an inheritance of $22,000.00. You intend to use your inheritance as a down payment on you house.
Suppose a stock had an initial price of $56 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $66. What was the dividend yield and the capital gains yield
The company's financial institution has offered a borrowing rate (cost of borrowing) of Prime + 2% and the co`s tax rate is 35%. The company can lease the equipment for $825,000 a year for four years
The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth
Your parents are giving you $310 a month for 5 years while you are in college. At a 8 percent discount rate, what are these payments worth to you when you first start college
What are the allocative and distributive differences between monopoly and perfect competition. What causes these differences.
A firm has established the following cost of debt and equity capital (withbankruptcy and agency costs) for various proportions of debit in its capital structures.
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