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(Cost of capital) The company has currently 20 000 shares outstanding. The book value per share is $15. The stock is currently trading at the P/B ratio of 2.0; P/E= 12 and EV/EBITDA=7.5. It is also known that the risk free rate is 4%, the beta of the stock is 2.0 and the market risk premium over risk free rate is equal to 5%.
The company is going to issue 8 000 coupon bonds with the par value of $100 per bond, 4% annual coupon rate. Similar bonds currently trade at 6% yield level . The bonds will mature exactly 5 years from now.
Find
Cost of debt and equity
The shares of debt and equity in capital structure
Find WACC and interpret your result?
There are some various interesting pieces of financial news in the media recently such as, China's slowing economy, European Union's antitrust lawsuit against google etc. I want each of you to dig into financial media, such as Wall Street Journal, CN..
What are the primary purposes of the Bankruptcy Code? Describe the creditor actions that are automatically held in abeyance when the debtor files a bankruptcy petition. When is a debtor allowed to void liens on his properties? What type of liens can..
Retail companies like Target and United Brands are more likely to have
Bank A is willing to trade at $1.50 per Swiss franc. - Bank B is willing to trade at 0.50 Swiss franc per dollar. - Is there an opportunity to make an arbitrage profit?
A company wants to raise 500 million in a new stock issue. Its investment banker indicates the sale of new stock will require 8% underpicking and a 7% spread. How much money will the investment banking syndicate's earn on the sale?
Baseline (last year) sales: $250 million Sales growth rates: Base year = 15% with a fade rate of 1% a year for years 1-10: (increasing sales due to sustained competitive advantage and a differentiated product)[source: Strategic Plan]. Fade rate is th..
BOND VALUATION Callaghan Motors' bonds have 13 years remaining to maturity. Interest is paid semi annually, they have a $1,000 par value, the coupon interest rate is 5%, and the yield to maturity is 6%. What is the bond's current market price?
Calculate the value of the option if the company waits one year. Should the company wait or go ahead with the project now?
As the Capital Budgeting Manager of Regal Corp., you are engaged in determining the Weighted Average Cost of Capital for the firm for the upcoming year. What is Regal's optimum, target capital structure? What is Regal's cost of retained earnings usin..
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. What is the change in the price of this bond (give me a percentage change) if the market yield rises to 6% from the current yield of 4.5%?
What would EPS, FFO, and ROC be under both approaches? How should Robust think about its accounting policy?
S&P 400 Midcap (CME) - Contract size: $500 x Index Open High Low Settle Chg High Low Volume Mar 502.25 506.30 497.25 505.75 +2.50 532.50 474.15 1,432 Apr 501.25 508.75 496.75 504.30 –1.25 540.35 478.30 867 You had purchased last week eight March S&P ..
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