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Given the following information for ABC corp., find the WACC. Assume the company’s tax rate is 35%. Debt: 3,000 8 percent coupon bonds outstanding, 20 years to maturity, selling for 103 percent of par; the bonds make semi-annual payments. Common stock: 90,000 shares outstanding, selling for $45 per share; the beta is 1.20. Preferred stock: 13,000 shares of 7 percent preferred stock outstanding currently selling for $108 per share. Market: 8 percent market risk premium and 6 percent risk free rate.
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.43 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to g..
participants in the money markets weighted average returns foreign alternativesconcepts in this casemoney market
Leaks occur along a pipeline at the mean rate of 0.5 leaks per mile. Assume Poisson properties apply. What is the probability that a 3 mile stretch will have no leaks? (to four decimal places)
A stock has an expected return of 15.5 percent, its beta is 1.65, and the expected return on the market is 12.6 percent. What must the risk-free rate be?
You buy a share of The Ludwig Corporation stock for $19.40. You expect it to pay dividends of $1.07, $1.16, and $1.2576 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.27 at the end of 3 years. Calculate the growth rat..
During 2014, Gutter Company. Had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. The non-convertible preferred stock has a par value of $100 per share. Gutter did not declare or pay any dividends during ..
If a stock has beta 1.0, how to interpret it? ______ The stock is riskier than average. The stock has average risk. The stock is less risky than average
Rocky Top, Inc. purchased some welding equipment six years ago at a cost of $579,000. Today, the company is selling this equipment for $110,000. The tax rate is 35 percent. What is the after tax cash flow from this sale? The MACRS allowance percentag..
You are chairperson of the investment fund for the Continental Soccer League. You are asked to set up a fund of semiannual payments to be compounded semiannually to accumulate a sum of $310,000 after ten years at a 14 percent annual rate (20 payments..
Two costs of construction of a small, remote mine are for labor and transportation. Labor costs are expected to be $120,000 the first year, with inflation of 6% annually for 4 years. If the firm uses inflation free MARR of 7%, calculate the equivalen..
You have just taken over as a fund manager at a brokerage firm. Your assistant, Thomas, is briefing you on the current portfolio and states "We have too much of our portfolio in Alpha. Even if the probabilities for different states of economy (expans..
A US Industries bond has an 8 percent coupon rate and a $1,000 face value. Interest is paid semi-annually, and the bond has 20 years to maturity. If investors require a 10 percent yield to maturity, what is the bond’s value?
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