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We want to determine cost of equity for Firm A. We know that Firm A's target debt-to-equity ratio is 1.50. We also know that there is a comparable firm which has exactly same lines of business and therefore is expected to have the same level of business risk as Frim A. The equity beta of the comparable firm is known to be 1.80. The market value of equity and the market value of debt of the comparable firm are $400 million and $200 million, respectively. The corporate tax rate is 20%. Based on the information given, answer following questions.
(a) What would be your estimate of equity beta for Frim A?
(b) If you find that equity beta is different between Frim A and its comparable firm in (a), how would you explain the difference? If you expect no difference explain why they are not different
Assume all of the same facts as in Part a., except that Roberta is self-employed. Identify which of the expenses are deductible, and indicate whether they are deductions for or from AGI.
if you put up 28000 today in exchange for a 8.25 percent 15-year annuity what will the annual cash flow
Calculate the expected rates of return for the market and Stock S.
At December 31, 2013, Vega Vaccum Corporation has cash in bank of 104,000, restricted cash in a separate account of $19,000, and a bank overdraft at another bank of $500. How much should it report as cash on the balance sheet?
Is your bond selling for a premium or at a discount based on your calculation? What other factors can impact bond valuation?
If the firm had $1,584,000 in credit sales over the four-month period, compute the average collection period. Avg. daily sales should be based on a 120-day period.
Organizations must address compliance concerns to ensure their longevity. There is a measurable amount of risk associated with falling out of compliance. The degree of risk to an organization differs from one compliance issue to another.
What is the NPV for the following project if its cost of capital is 15 percent and its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in..
Assuming that Castle View currently does not have any working capital invested in this division,calculate the cash flows associated with changes in working capital for the first five years of this investment.
Calculation of cash collection and ending accounts receivables and Budgeted sales for the second quarter of the year for Reuben Company are as follows
use the following information to calculate the change in a companys cash balance for the year.credit sales 800000cash
The annual expected return and standard deviation of returns for 2 assets are as follow.
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