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You are an investment banker trying to value Dell, a private company. You have forecasted Dell’s free cash flows, but need to compute its WACC in order to value the firm. Unfortunately Dell is private and so it does not have stock data, so you cannot use CAPM to find its cost of equity. You know the following: Dell has debt of $200 at a cost of 5%; further, Dell recently raised money from equity investors, valuing the equity at $1,000. Further, HP is in the same exact business as Dell, but it is public so you can see its cost of equity. HP is financed with a constant debt-to-equity ratio of 1/10, has a cost of debt of 3%, a cost of equity of 22%, and a tax rate of 30%. Find the unlevered cost of capital for Dell and HP. Assume that HP’s debt-to-equity ratio will stay constant forever. 20.3% 22% 22.5% 24.3%.
Calculate EMC's estimated value of operations
What are some of the most important consequences of GPNs?
Emma, the sole shareholder of Quail Corporation (a C corporation), has the corporation pay her a salary of $300,000 in 2008. The Tax Court has held that $80,000 represents unreasonable compensation. Assuming Emma is in the 35% bracket in 2011, the Ta..
One similarity and one difference between an individual’s approach to risk management and a firm’s approach to risk management. How is asset backed securities structured? And how large is the asset backed securities market?
Explain the differences between transactions banking and relationship banking.
Post a tax or nontax advantage or disadvantage of her entity choice
Three types of market rental for spaces: residential, retail and commercial rentals. Which would be preferable under which circumstances?
Using ideas and models found in chapter 19 of kotler and kellers, describe how your organization should change its current policy on markettiing communications and adopt ideas from the chapter to achieve true communication integration and enhanced br..
Wacky Widgets, Incorporated is considering a new three-year expansion project to make new Widgets.
Quantitative Problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semi-annual payments of $30, and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 7.2%, what is the value of ..
Trixie is buying a new car at a cost of $22099. She estimates the car will sell for $3118 at the end of year 6. Insurance, fees, maintenance, and gas will be $1108 in year 1 and will increase every year by 9%. If she keeps the car for 6 years, what i..
Zellar’s, Inc. has announced that that their next annual dividend has been set at $3.50 per share. Also, the company announced that all future dividends will increase by 5.5 percent annually. What is the maximum amount you should pay to purchase a sh..
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