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Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is $53, and the book value per share is $4. Filer manufacturing also has two bond issues outstanding. The first bond issue has a face value of $70 million and a coupon rate of 7% and sells for 108.3% of par. The second issue has a face value of $60 million and a coupon rate of 7.5 % and sells for 108.9% of par. The first issue matures in 8 years, the second in 27 years. a) What are Filer’s capital structure weights on a book value basis? b) What are Filer’s capital structure weights on a market value basis? c) Which are more relevant, the book value of the market value weights? Why? d) Suppose the company’s stock has a beta of 1.2. The risk-free rate is 3.1%, and the market risk premium is 7%. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments and the tax rate is 35%. Given this information, what is the company’s WACC?
Amortization with Equal Payments [LO 3] Prepare an amortization schedule for a three-year loan of $81,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loa..
You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $450 per unit and sales volume to be 1,200 units in year 1; 1,325 units in year 2; and 1,000 units in ..
Which of the following is true about the leveraging effect?
Explain how cost of equity, cost of debt, WACC, and allowances for various risk factors are involved in determining the "required return" on proposed international capital investments.
Josh has decided to take a course at the local community college that could help him get a promotion at work. The course begins at 5 p.m. and goes until 9 p.m. on Monday nights. Josh normally works until 5 p.m. each day, but because of the drive time..
A 20-year, $200,000 loan at a nominal annual interest rate of 12% convertible monthly is being paid off via the sinking fund method. The nominal annual interest rate earned on the sinking fund is 9% convertible monthly. What is the net amount of inte..
On average, your firm sells $25,800 of items on credit each day. The firm's average operating cycle is 35 days and it acquires and sells inventory, on average, every 18 days. What is the average accounts receivable balance? A firm sells 14,200 units ..
describe how the u.s. financial markets impact the economy businesses and individuals.explain the role of the u.s.
Assuming that Mr. Smith does not need money desperately, which would be the best decision for Hyun-Woo (in terms of present value of future money)? (at 8% discounted interest rate)
What is the importance of using the specified asset class in strategic asset allocation for the following types of investors? What is your suggested weight for each of the allocations? Why? Long-term bonds for a life insurer and for a young investor...
Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project...
Use Ford’s latest consolidated and segment financial statements (form 10K) as filed with the SEC. Calculate the current ratio and profit margin for the company as a whole. on Ford’s planning assumptions and key metrics share.
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