Reference no: EM13194794
A summary of the balance sheet of Travellers Inn Inc. (TII), a company which was formed by merging a number of regional motel chains and which hopes to rival Holiday Inn on the national scene, is as follows:
Travellers Inn Inc.
Balance Sheet
December 31, 2012 (Millions of Dollars)
Cash $ 10 Accounts payable $ 10
Accounts receivable 20 Accruals 10
Inventories 20 Short-term debt 10
Current Assets $ 50 Current liabilities $ 30
Net fixed assets 50 Long-term debt 30
Common stock 10
Retained earnings 30
Total assets $100 Total liabilities & equity $100
Consider the following facts for TII:
(1) Short-term bank debt currently costs 6 percent and it is used to finance receivables and inventories on a seasonal or temporary basis.
(2) Long-term debt consists of 20-year, semiannual payment mortgage bonds, each with a face value of $1,000 and an annual coupon rate of 8 percent. Currently, these bonds provide investors a yield-to-maturity of 9 percent.
(3) The company has 4 million shares of common stock outstanding at a current market price of $15 per share. Its equity beta is 1.5, the Treasury bond rate is 3 percent and the market risk premium is 7 percent.
(4) TII is in the 40 percent federal-plus state marginal tax bracket.
Estimate the company's weighted average cost of capital (WACC) using market value capital structure weights.
|
Socially neutral
: Certain technologies often view themselves as "socially neutral." Do you find this view acceptable? Or does technology always have some social affect on society as a whole?
|
|
What is the size of the industry
: what is the size of the industry and how is the industry segmented - what is the industry's projected growth and profitability?
|
|
Usa patriot act
: identifying three advantages and three disadvantages of the USA PATRIOT Act. State your opinion and provide reasoning for it.
|
|
Compute the molar mass and density of dry air
: Dry air (0% humidity) is approximately 78% N2, 21% O2, and 1% Ar by moles. Calculate the molar mass and density of dry air at 0 °C and 1.0 atm. Assume ideal behavior and use two significant figures in your answers.
|
|
Short-term bank debt currently costs
: Short-term bank debt currently costs 6 percent and it is used to finance receivables and inventories on a seasonal or temporary basis.
|
|
Transition from military specifications
: How did the transition from military specifications and standards to performance specifications and non-government standards impact RAM? Select all that apply.
|
|
Define when the gases are allowed to mix together
: Container A holds 727 mL of ideal gas at 2.20 atm. Container B holds 134 mL of ideal gas at 4.20 atm. If the gases are allowed to mix together
|
|
Define when the gases are allowed to mix together
: Container A holds 727 mL of ideal gas at 2.20 atm. Container B holds 134 mL of ideal gas at 4.20 atm. If the gases are allowed to mix together
|
|
State what is the molar mass of the unknown gas
: A gas mixture is made by combining 8.1 g each of Ar, Ne, and an unknown diatomic gas. At STP, the mixture occupies a volume of 19.20 L. What is the molar mass of the unknown gas?
|