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Unsure of how to calculate the new stock price for the following question: Assume that a company has $10 million in assets (where the market value of the assets is equal to the book value of the assets) and no debt. The company's marginal tax rate is 35% and has 500,000 shares outstanding. The company's earnings before interest and taxes (EBIT) is $3.88 million. The firm's stock price is $27 per share and the cost of equity is 11%. The company is thinking of issuing bonds and simultaneously repurchasing a portion of its stock. If the company changes its capital structure from no debt to 25% debt based on market values, the firm's cost of equity will increase to 13% because of the increased risk. The bonds can be sold at a cost of 9%. The firm's earnings are not expected to grow over time. All of its earnings will be paid out as dividends.
there may be some truth in these capm and apt theories but last year some stocks did much better than these theories
Discuss the most important challenges of the financial sector. Defend whether you think regulatory changes are imperative. If yes, recommend changes. If no, justify your opinion.
Assume debt tax shields have a net value of $0.25 per dollar of interest paid. Calculate the project's APV.
burry corporation acquires 80 of bowman company for 40 million on january 1 year 6. at the time of acquisition bowman
carlson manufacturing has some equipment that needs to be rebuilt or replaced. the following information has been
Coupon payments will be made annually. Investors buying the bonds today will earn a yield to maturity of 9.09 percent. At what price will the bonds sell in the marketplace.
the real risk-free rate is expected to remain constant at 3. inflation is expected to be 4 a year for the next four
Suppose you are a consultant to a company evaluating an expansion business. The cash-flow forecasts in millions of dollars for the project are:
a guy borrows 9700 and wants to repay it 750 every six months with the first payment in 6 months. if the loan terms are
You have won the $1.4 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday, 78 years from now.
1.suppose that you own an ice cream store and you wish to model the queuing process at the store. after careful
Under the plan there will be more bonds outstanding, and that will increase their liquidity and thus lower the interest rate on the currently outstanding bonds.
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