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Point 1: The target capital structure of the Tysseland Company consists of $30 million in debt and $30 million in common equity. During the year, the company plans to raise and invest $10 million in new projects.
Point 2: New bonds will have a 7% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The next expected annual dividend is $1.20, and the annual growth rate in dividends of 8% is expected to continue forever. The marginal corporate tax rate is 30%.
Question 1: Assuming there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity, what is its
1. After -tax cost of debt?
2. Cost of equity?
3. WACC?
4. Now assume that Tysseland issues new shares and floatation costs are 10%. What is the new WACC?
On January 1 of the current year, Feller Corporation issued $5,000,000 of 10% debenture bonds on a basis to yield 9%, receiving $5,224,300. Interest is payable annually on December 31 and the bonds mature in 6 years. The effective-interest method is ..
The accounting records of Westcott Company revealed the following costs: Factory utilities $ 35,000, Wages of assembly-line personnel 170,000, Customer entertainment 45,000
A company has net income of $3000000. It has 600,000 weighted-average common shares outstanding and a price-earnings ratio of 17. what is the market value per share of this company's stock?
the shared outstanding and the balance in the Capital in Excess of par account
ACC701 Accounting Financial Individual Assignment. Discuss the ethics and governance in explaining the company's financial stress
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On January 13, 20x1, sterling sold merchandise for $960 to Rob Sumner; terms, 2/10,n/30. On June 3, 20x1, Sterling was notified that Rob had gone out of business. Sterling received $200.00 cash from Rob and wrote off the balance of his account. (to r..
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Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 64 shares with a basis of $3,200, and Clyde owns the remaining 36 shares with a basis of $10,500. At year-end, Getaway is considering different alternatives for redeem..
Prepare the journal entry to record bad debt expense assuming Sandel Company estimates bad debts at (a) 1% of net sales and (b) 5% of accounts receivable.
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