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What is the weighted average cost of capital (WACC) of a firm that has: a. Outstanding debt with a face value of $20 million, a coupon rate of 6%, an average maturity of 10 years, pay semiannual coupon payments, and is priced to yield 4.5% b. Has 1 million shares outstanding and is expected to pay a dividend of $2 next year. The dividend retention ratio of the company is 60%, the return on equity is expected to be 10% for the foreseeable future, and the required rate of return is 12%. Assume the firm has a tax rate of 40%.
Mike bought a stock and he found that the stock has an expected return of 19.5% with a standard deviation of 7%.
Weights used in calculating the WACC
Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no Tran’s fats. The firm expects that sales of the new pizza will be $18 million per year. Assume customers ..
A revolving credit agreement is:
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Calculate the semi-annual interest payment. Calculate how much the city will receive from the bond offering under the following conditions.
Calvani, Inc., has a cash cycle of 39.5 days, an operating cycle of 55 days, and an inventory period of 23 days. The company reported cost of goods sold in the amount of $355,000, and credit sales were $578,000. What is the company’s average balance ..
Assuming interest rate parity holds, estimate the 2-year forward rate (euros to one dollar).
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