To maintain the present capital structure how much of the

Assignment Help Finance Basics

Reference no: EM13460873

Jan. 1 the total market value of the Tysseland Co. was $60 million. During the first year the company plans to raise & invest $30 million in new projects. The firms present market value structure is considered to be optimal. Assume that there is no short-term debt: Debt $30 million + common equity $30 million = $60 million total capital. New bonds will have a 8% coupon rate & they will be sold at par. Common stock is currently selling at $30 a share. Stockholders' required rate of return expected constant growth rate of 8%. (the next expected dividend pymt is $1.20, so $1.20/$30 = 4%)

a. to maintain the present capital structure, how much of the new investment must be financed by common equity? the answer is $15,000,000 how do I arrive at this number?

b. Assume there is sufficient cashflow so the co. can maintain its target capital structure w/o issuing additional shares of equity. what is the WACC? answer is 8.4%, how do I arrive at this number?

Reference no: EM13460873

Questions Cloud

A truck driver transporting new cars needs to roll the : a truck driver transporting new cars needs to roll the cars off the truck. you offer to design a ramp to help with that

Demonstrative communication includes nonverbal and : write a 700- to 1050-word paper describing demonstrative communication. demonstrative communication includes nonverbal

Explain why only consider one-dimensional motion when : 1 explain why an object too far from the motion detector will produce an incorrect distance reading?2 look up an

If you were to take a sample of companies with comparable : do you think there is a correlation between ceo salaries and the degree of success of a company? if you were to take a

To maintain the present capital structure how much of the : jan. 1 the total market value of the tysseland co. was 60 million. during the first year the company plans to raise amp

Explain person in your family who has the highest : there are many theories of motivation each with something to offer. biological theories center on instinct. for example

Write down a 1050- to 1400-word paper in which you answer : write a 1050- to 1400-word paper in which you answer the following questions from the point of view of the

Speculate how southwest airlines would continue to thrive : determine how southwest airlines corporate culture differs from other airlines1.analyze three 3 ways that southwests

Examine freuds psycho-dynamic theory in terms of views of : now according to the psychoanalytic view the personality consists of three systems the id the ego and the superego.

User Account

All Pages