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!
1.Hartford Mining has 50 million shares that are currently trading for $4 per share and $200 million worth of debt. The debt is risk free and has an interest rate of 5%, and the expected return of Hartford stock is 11%. Suppose a mining strike causes the price of Hartford stock to fall 25% to $3 per share. The value of the risk-free debt is unchanged. Assuming there are no taxes and the risk (unlevered beta) of Hartford’s assets is unchanged, what happens to Hartford’s equity cost of capital?
2.Mercer Corp. is an all equity firm with 10 million shares outstanding and $100 million worth of debt outstanding. Its current share price is $75. Mercer’s equity cost of capital is 8.5%. Mercer has just announced that it will issue $350 million worth of debt. It will use the proceeds from this debt to pay off its existing debt, and use the remaining $250 million to pay an immediate dividend. Assume perfect capital markets.
a. Estimate Mercer’s share price just after the recapitalization is announced, but before the transaction occurs.
b. Estimate Mercer’s share price at the conclusion of the transaction. (Hint: use the market value balance sheet.)
c. Suppose Mercer’s existing debt was risk-free with a 4.25% expected return, and its new debt is risky with a 5% expected return. Estimate Mercer’s equity cost of capital after the transaction.
Janjigian Company's stockholders have provided $15,250 of capital, part when they purchased new issues of stock and part when they allowed management to retain some of the company's earnings.
You are saving money to buy a car. if you save 310 per month starting one month from now at an interest rate of 9%, how much will you be able to spend on the car after saving for 4years?
In June when the company receives the $452,000 from the customer, which account should the company credit?
demonstrate your understanding of financial concepts by completing the following problems. where appropriate show or
We expect that we can receive annual incremental income after taxes of $25,000 which includes an adjustment for uncollectible accounts. What is the maximum commitment to A/R we should be willing to assume if our firm's minimum required after-tax r..
The depreciation expense is $4,300 and the tax rate is 35 percent. What is the projected net income (NOPAT) for the first year of the project?
Explain why increased regulatory capital requirements lead to a greater consolidation of banking firms via mergers and acquisitions.
the three year zero rate is 7 per annum and the four year zero rate is 7.5 pa both continuously compounded. what is the
If the goal of the practice is to earn a 20% profit margin on each examination, how should the examinations be priced?
1. what would be the cost of retained earnings equity for tangshan mining if the expected return on u.s. treasury bills
Determine how much the FRA is worth and who pays who- the buyer pays the seller or the seller pays the buyer. Should the bank buy or sell the FRA?
when creating a budget for an organization it is important to consider several outputs. these outputs depend on the
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