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1. True or False: A firm's Weighted Average Cost of Capital should be higher when inflation is higher, lower when inflation is lower.
2. Your firm has a marginal tax rate of 35% and the following capital structure:
Debt: (Long term bonds)
Total face value: 75 million
Total market value: 65 million
Coupon Rate: 9%
Yield to Maturity: 10%
Common Equity
Total book value: 80 million
Total market value: 120 million
dividend yield: 4%
Required rate of return (according to CAPM): 18%
What is your firm's Weighted Average Cost of Capital?
3. True or False: When calculating a firm's Weighted Average Cost of Capital (WACC). One should use the book values of debt, preferred stock and common equity to calculate the relative weights for the three components of the firm's capital structure.
For the past 3 years, you have been saving $60,000 of your salary each year for a down payment on your dream house. The house is located In a nice area and is currently listed at $265,000. J.P. Morgan chase bank is willing to give you a 30 year loan ..
you buy an asset for Rs.1,000,000. If it costs Rs.100,000 for shipping and installation,- how much is your investment outlay?
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Suppose you can afford to pay $ 250 a month for 9 years towards a new car with no down payment. If the current interest rates are 4.25%, how expensive a car can you afford?
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Assume that only one confrence will be attended and the estimated expenses associated with this conference are on target.
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The 2016 income statement showed an interest expense of $99,000. What was the firm's cash flow to creditors during 2016?
WhackAmOle has 5 million shares of common stock outstanding, 4.0 million shares of preferred stock outstanding, and 100,000 bonds. Assume the common shares are selling for $59 per share, the preferred shares are selling for $48.00 per share, and the ..
Orange Inc, a calendar year corporation in Clemson, South Carolina, elects S corporation status for 2014. The company generated a $74,000 NOL in 2013 and another NOL of $43,000 in 2014. Orange recorded no other transactions for the year.
How much should you deposit now in a bank account that pays 12% per year compounded monthly?
how much money must you put in a savings account today?
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