Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Firms A and B are identical except for their capital structure. A carries no debt, whereas B carries £200 of debt on which it pays 6% interest rate. Assume no transaction costs, no taxes, risk-free debt and perfect capital markets. The relevant numbers are provided in the following table:
A
B
Value of Firm
300(given)
400(given)
Debt
0(given)
200(given)
Equity
300
200
Earnings before interest
30(given)
Interest payment
0
12
Interest rate
Not Applicable(given)
6%(given)
Earnings after interest
30
18
Return on Equity
10%
9%
Debt/Equity Ratio
1
Cost of Capital
7.5%
i. To reduce the company's cost of capital, the management of Company A should start a programme of stock repurchases financed through the issue of new debt.
ii. To reduce the company's cost of capital, the management of Company B should issue equity to reduce its debt burden.
iii. Relative to Company B, Company A is undervalued.
iv. The situation described in the table is the result of capital markets equilibrium.
v. The situation described in the table violates Modigliani-Miller Proposition 1.
You have decided to invest a graduation gift of $1000. The yearly rate of return is given in the following table for each of three different types of investments & three (3) different states of economy.
A firm is planning on paying its first dividend of $2 three years from today. After that, dividends are expected to grow at 6% per year indefinitely. The stock's required return is 14%.
Determine the yield to maturity (YTM) on the bonds given the current price. Based on each bond's ratings and your determination of its yield to maturity, explain how you rank each bond for risk and return.
If it is a private good and not a public good, why is garbage collection so often provided directly by government and not the private sector?
Render an opinion to potential investors on the proper value of the securities being offered
Build a Balanced Scorecard for the unit of the organization for which you work, or have worked. Unless you are in senior management, focus on the unit with which you are most familiar rather than the organization as a whole.
question 1you invest 30 in ham and 70 in cheese.nbspnbspnbsp timehamcheese1-.04.112.15.413.21-.134.18.39find the return
Total annual savings needed to be calculated considering time value of money - Remember to label each goal and add the required sums for each goal together to find the TOTAL ANNUAL SAVINGS required to fund their goals.
Assume Rf is 5% and Rm is 10 percent. According to the SML and the CAPM, an asset with a beta of -2.0 has a required return of negative 5 percent.
What are some of the key differences between a company and a partnership What decisions must be made, and what steps have to be taken, to incorporate the new company?
Determine the long-run earnings growth rate for MLWT and the current (date 0) share price for MLWT
Five & a half years ago, Chris invested $10,000 in a retirement amount that increase at the rate of 10.82% per year compounded quarterly.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd