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Your company has two divisions: One division sells software and the other division sells computers through a direct sales channel, primarily taking orders over the internet. You have decided that Dell Computer is very similar to your computer division, in terms of both risk and financing. You go online and find the following information: Dell's beta is 1.16, the risk-free rate is 4.4%, its market value of equity is $65.8 billion, and it has $699 million worth of debt with a yield to maturity of 5.8%. Your tax rate is 35%and you use a market risk premium of 5.3% in your WACC estimates.
a. What is an estimate of the WACC for your computer sales division?
b. If your overall company WACC is 12.3% and the computer sales division represents 37% of the value of your firm, what is an estimate of the WACC for your software division?
describe a bearish pattern with the two MA lines and discuss why it is bearish.
Compute the current price of the bonds if the present yield to maturity is:
Corporate Valuation: List and discuss four factors that drive value of corporations. Use relevant examples.
Twenty-first century changes are as fast as hydroplane speed racers-and often as breathtakingly adventurous as navigating a raging river."
Determine the payback period for this project. Should the company accept the project?
assume that changes in working capital are negligible and capex and depreciation are of the same magnitude and therefore cancel each other.
Staton-Smith Software is a new start-up company and will not pay dividends for the first five years of operation. What is stock's price if an investor wants.
The principal is being accumulated with 16 annual deposits in a sinking fund that pays 11% effective. Determine the net interest in year 12.
What is the company’s contribution margin (CM) ratio?
Franklin Templeton has just invested $9,260 for his son (age one). This money will be used for his son’s education 18 years from now. He calculates that he will need $71,231 by the time the boy goes to school. what rate of return will mr. templeton n..
A project currently generates sales of $12 million, variable costs equal to 60% of sales, and fixed costs of $2 million. The firm’s tax rate is 50%. The project will last for 10 years. The discount rate is 12%. What is the effect on project NPV, if s..
How much would you have to invest today to receive? a. $6,900 each year for 19 years at 9 percent?
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