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Your company has two divisions: One division sells software and the other division sells computers through a direct sales channel, primarily taking orders over the internet You have decided that Dell Computer is very similar to your computer division, in terms of both risk and financing. You go online and find the following information: Del's beta is 1.22. the risk-free rate is 44%, its market value of equity is S67.7 billion. and it has $695 million worth of debt with a yield to maturity of 5, 9%. Your tax rate is 38% and you use a market risk premium of 5.8% in your WACC estimates. a. What is an estimate of the WACC for your computer sales division? b. your overall company WACC is 11.4% and the computer sales division represents 43% of the value of your firm, what is an estimate of the WACC for your software division?
a. What is an estimate of the WACC for your computer sales division? The weighted average cost of capital for your computer sales division is %
b. Your overall company WACC is 4% and the computer sales division represents 43% of the value of your firm, what is an estimate of the WACC for your software division? The WACC for your software division is %.
If you were to enter the banking industry you may find yourself approving or not approving loans. Do you see this practice as a matter of ethical and or legal concern? Do you think most all companies “window dress” their data?
Burke Tires just paid a dividend of D0 = $0.50. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the..
In order to fund her retirement, Michele requires a portfolio with an expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock..
The major ways in which acid rain causes damage, such as through forest erosion, property damage, reduced visibility, and adverse health outcomes.- Which of these costs are highly localized, and which are borne by society more broadly? Explain.
Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip.
A bond sells for $1290, pays $60 annual interest and matures in 20 years. It has a callable feature giving the right to the firm to buy it back from the investor after 8 years at 108 par value. Find the YTM and the YTC of the bond. Which of the 2 wil..
A firm has a market value equal to its book value.- what will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?
The day Little Joey was born his smart Grand Parents opened an Investment Account that promised to pay 8% per year with a lump sum of $10,000. In addition, they had been investing $100 per month in the same account. Today Joey turned 18 and his Grand..
You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. What will cash flows for this project be?
a regional bank has decided to open an office overseas for serving those businesses that are expanding internationally.
Your best estimate of the net change to annual depreciation and amortization expense that would occur if you execute the project is...
Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II).
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