Reference no: EM131263955
Consider the following balance sheet:
Assets
Current assets $38,000,000
Net plant, property, and equipment $101,000,000
Total Assets $139,000,000
Liabilities and Equity
Accounts payable $10,000,000
Accruals $9,000,000
Current liabilities $19,000,000
Long term debt (40,000 bonds, $1,000 face value) $40,000,000
Total liabilities $59,000,000
Common Stock (10,000,000 shares) $30,000,000
Retained Earnings $50,000,000
Total shareholders equity $80,000,000
Total liabilities and shareholders equity $139,000,000
This company's stock is currently selling for $7.50 per share and the bonds are selling for $889.50 per bond. These bonds' yield to maturity is 7.6%. The beta for this company is approximately equal to 1.1. The yield on a 6-month Treasury bill is 3.5% and the yield on a 20-year Treasury bond is 5.5%. The expected return on the stock market is 11.5%, but the stock market has had an average annual return of 14.5% during the past five years. This company is in the 40% tax bracket.
What is the cost of equity?
What is the after-tax cost of debt?
What are the weights on debt and equity?
What is the Weighted Average Cost of Capital?
|
Create a vulnerability chart based on the fact pattern
: Create a vulnerability chart based on the Fact Pattern. Consult Module 4 and the associated textbook readings to review the purpose of a vulnerability chart.
|
|
Explain what is the affordable care act
: What is the Affordable Care Act? Your challenge for this week is to summarize the Affordable Care Act and discuss the current/upcoming activities of the U.S. Supreme Court related to the Act.
|
|
Are their natural clusters in the data
: STA 141A Fall 2016 Assignment Topic: R Programming. Are their natural clusters in the data? Are these clusters related to different natural strata determined by the values of the categorical variables like Ed, Race, Sex, Smoke
|
|
Column headings and compute depreciation for each year
: A machine costing $257,500 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its life. Prepare a ..
|
|
What are the weights on debt and equity
: This company's stock is currently selling for $7.50 per share and the bonds are selling for $889.50 per bond. These bonds' yield to maturity is 7.6%. The beta for this company is approximately equal to 1.1. The yield on a 6-month Treasury bill is 3.5..
|
|
Compute the adjusted gross income and taxable income
: Compute: 1) Adjusted Gross Income, 2) Taxable Income, 3) Tax Owed or Refunded?
|
|
Amount of cash to be paid for operating expenses
: Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other relevant expense items are to be paid in the month in which they are recognized. Based upon these management assumptions, and your analy..
|
|
Compute the annual depreciation and the book value year
: You buy office furniture. The office will be open for 6 years, and then you will sell the furniture. The purchase price of the furniture is $40,000. It will contribute to the profitsin the amount of $20,000 per year. MARCS is 7 years with 150% DB. Co..
|
|
How far can light travel in one year
: How far can light travel in one year? If you throw a 0.25-kg ball with a force of 20 N, what's the acceleration of the ball? Which of the following best demonstrates the effect of static friction?
|