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XYZ corp. currently has 50 million shares of common stock outstanding. Their current market price is $80 per share and have a beta of 1.15. XYZ has $1 billion of bonds outstanding, each with the market value of $1100. It is known that the yield to maturity of the bond is 7.85%. XYZ also has 100 million shares of preferred stock outstanding which pay a dividend of $3 annually. The preferred shares are currently trading at $27 a share. The expected return on the S&P 500 is 14% and TBills are yielding 5%. The corporate tax rate is 40%. What is XYZ’s WACC? Show all work! A)What si the cost of common stock, Rs? B)What is the pre-tax cost of debt, Rd? C)What is the after-tax cost of debt, Rdt? D)What is the cost of preferred equity, Rs? E)What are the capital structure weights? F) What is the WACC?
What are the advantages and disadvantages of using financial leverage? Answer from the banker's point of view and then from the bank regulator's point of view.
Which of the following would lower the sum of the present values of expected cash flows?
Briefly explain the following debt features: Loan Agreement. Restrictive Covenant.
this section provides the opportunity to develop your course project. conducting an internal environmental scan or
A stock price is currently $100. Over each of the next two six-month periods it is expected to go up by 12% or down by 6%. The risk-free interest rate is 5%. What is the risk-neutral probability that the stock price will increase each period? (Report..
Winston enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $158.82 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for..
Consider a 4% coupon 30-year option-free bond selling at 72.3244 and yielding 6%. If the yield is decreased by 20 basis points, the price would increase to 74.5492. If the yield increases by 20 basis points, the price would decrease to 70.1988. Calc..
Assume that k* = 1.0%; the maturity risk premium is found as MRP = 0.2%(t - 1) where t = years to maturity; the default risk premium for AT&T bonds is found as DRP = 0.07%(t - 1); the liquidity premium is 0.50% for AT&T bonds but zero for Treasury bo..
USB Manufacturing Inc. carries a sizeable portfolio of long-term debt in its balance sheet. The company expects increased volatility in long term interest rates and is concerned about its equity exposure to interest rate risk. Show your calculation. ..
Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $178,800, how many dollars of revenue must the company generate in order to reach the break-even point?
The original Barbie doll was introduced in 1972 and sold for approximately $3.00. In year 2015, a mint-condition doll in its original box would be listed on EBay at approximately $700.00. What average annual rate of return would the seller realize if..
Carson Corporation stock sells for $59 per share, and you've decided to purchase as many shares as you possibly can. You have $39,000 available to invest. What is the maximum number of shares you can buy if the initial margin is 60 percent?
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