Reference no: EM13200600
1. Potsdam Co has 3 million shares of common stock, each selling for $30, with β = 1.7. The company has $40 million in long-term bonds, selling at par, with coupon 7%. The tax rate of Potsdam is 30% and the risk-free rate is 5%. The expected return on the market is 12%. Find the WACC for Potsdam.
2. Ohio Corporation has 6 million shares of common stock priced at $25 per share, which has just paid its annual dividend of $1.75. The dividends have grown steadily at the rate of 5% per year and the investors expect the growth to continue in the future. The 6% coupon bonds of the corporation have a face value of $60 million. The bonds will mature in 10 years and currently they sell at $857.14 each. The tax rate of Ohio is 25%. Calculate its WACC.
3. Erlangen Corporation needs a new machine that will cost $50,000. It will run for 5 years and the firm will depreciate it on a straight line basis, with no resale value. The machine will add $14,000 annually to Erlangen's earnings before taxes. The proper discount rate is 12% and the tax rate is 32%. Should Erlangen install the machine?
4. Freiburg Company wants to buy a machine that has expected life of 6 years. It costs $30,000, and increases the income of the company by $7,000 annually. It has a salvage value of $5,000. The proper discount rate is 12%, and the company pays no taxes at present. Should Freiburg purchase this machine?
|
The study of increasing resources
: the study of how to increase resources and create conditions that will make better use of resources. Resource development or Economics or else.
|
|
Improving the firms financial condition
: Analyze the data and draw your conclusions, comparing the financial conditions at the end of Yr2, Q8 to the Yr1, Q4. Finally, provide your recommendations for improving the firm's financial condition in a third year of operation.
|
|
What are the highest and lowest temperatures
: at a point (x,y) on a metal plate is T(x,y)=4x2-4xy+y2. An ant on the plane walks around the circle of radius 5 centered at the origin. What are the highest and lowest temperatures encountered by the ants.
|
|
Which country would expect to have a hier standard of living
: suppose Arnor and Gondor are two very similar countries that started out with identical population, technologies, etc. except that Gondor has a much higher mortality rate due to a more hazardous geographical location.
|
|
Find the wacc for potsdam and the machine
: The tax rate of Potsdam is 30% and the risk-free rate is 5%. The expected return on the market is 12%. Find the WACC for Potsdam and the machine will add $14,000 annually to Erlangen's earnings before taxes.
|
|
Find the ground speed of the plane
: A plane is flying at an airspeed of 340 mh at a heading of 124 degrees. A wind of 45 mph is blowing fro mthe west. find the ground speed of the plane.
|
|
How many pints of each of the two existing types of drink
: How many pints of each of the two existing types of drink must be used to make 40 pints of a mixture that 80% is pure fruit juice?
|
|
Why a point is an inefficient point
: Label a point f inside the curve. why is this an inefficient point. label a point g outside the curve. why is this point unattainable.
|
|
Find the rieman sum
: Find the Rieman sum for f(x)=x-2sin2x, 0
|