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Find the WACC for ABC Corp using the information provided below.
Common stock: 300,000 shares outstanding, selling for $30 a share. Beta is 0.85.
Preferred Stock: 50,000 shares outstanding, selling for $65 a share. The stock pays a $5 annual dividend.
Debt: 9,000 8% coupon bonds outstanding selling at 115 percent of par. Current YTM is 6.5%.
Market: 8 percent market risk premium and 2.5 percent risk free rate.
Fama’s Llamas has a weighted average cost of capital of 10.4 percent. The company’s cost of equity is 13 percent, and its pretax cost of debt is 8.4 percent. The tax rate is 40 percent. What is the company’s target debt−equity ratio?
Why might forward contracts be advantageous for committed transactions, and currency options be advantageous for anticipated transactions?
AMP, Inc., has invested $2,165,800 on equipment. The firm uses payback period criteria of not accepting any project that takes more than four years to recover costs. The company anticipates cash flows of $448,386, $512,718, $563,755, $764,997, $816,5..
The beta of M Simon Inc., stock is 1.3, whereas the risk-free rate of return is 0.08. If the expected return on the market is 0.14, then what is the expected return on M Simon Inc?
Knight Supply Corp. has not grown for the past several years, and management expects this lack of growth to continue. The firm last paid a dividend of $4.25. If you require a rate of return of 15.5 percent, what is the current value of this stock to ..
Sqeekers Co. issued 11-year bonds a year ago at a coupon rate of 7.7 percent. The bonds make semi annual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price?
General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services: Fixed costs: $10,000,000; Variable cost per inpatient day $200; Charge (revenue) per inpatient da $1,000. The hospital expects to hav..
A project costs $10,000 to pursue today and generates pre-tax savings of $1,500 per year for the foreseeable future. The marginal tax rate is 35%. The proect also requires an initial NWC investment of $300 which will not be recouped. If the required ..
Over the past 5 years, NBA’s common stock earnings per share have grown from $0.62 to $0.91. If an investor in NBA stock is assumed to have a required rate of return of 14%, what is the estimated value of NBA if its current dividend is $0.12? Assume ..
after deciding to buy a new car you can either lease the car or purchase it with three-year loan. the car you wish to
The book value of equity of a firm is $82 million and the market value of equity is $96 million. The face value of debt of the firm is $40 million and the market value of debt is $16 million. What is the market value of assets of the firm?
Cayman Corporation just paid a dividend of $4.00 on its common stock. Expectations for growth in earnings are expected to be unusually high over the next 2 years. As such, Cayman expects its dividend to grow at a rate of 30% over the next 2 years aft..
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