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Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $3 million of retained earnings with a cost of rs = 13%. New common stock in an amount up to $7 million would have a cost of re = 16%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd = 10% and an additional $6 million of debt at rd = 12%. The CFO estimates that a proposed expansion would require an investment of $11.8 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
Which of the following does NOT reduce the length of time of collection float for a? firm? A. The firm paying suppliers with a credit card B. Direct payment via online checking C. Electronic fund transfers? (EFT) D. Lockboxes
Interpret the following earnings at risk data. What does it suggest regarding the bank's risk exposure? Earnings- at- Risk Interest Rate Change (%) 1 Year 2 Years + 1% shock + 2.4% + 4.9% - 1% shock - 1.7% - 5.5% - 1% yield curve inversion + 1.1% - 2..
calculate your final answer using the formula and financial calculator methods.
If the relevant annual rate of return is 8.5 percent, what is the present value of this liability?
Value a Constant Growth Stock Financial analysts forecast Best Buy Company (BBY) growth for the future to be 16.00 percent.
Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 8 percent thereafter.
Selling equity at this stage clearly is not attractive – they would have to give up most of the company, as little value has been created so far. So the founders are considering a different funding scheme to skirt the valuation issue (or at least to ..
What is Project Whiskey’s discounted payback period if our WACC is 8%?
What would Schlumberger’s after-tax WACC be, given this information?
Which of the following conditions must be met before revenue is recognized? Which of the following statements about bad debts are true?
On August 8th the? six-month risk-free rate of interest in Switzerland was 3 percent. what would you expect the U.S.? six-month risk-free rate to? be?
What was the cash flow from operating activities?
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