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A. Blake Electronics, Inc. is evaluating its cost of capital. Under consultation, Blake Electronics, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Blake Electronics, Inc. is currently selling for $20.00 a share. Blake Electronics, Inc. expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. Blake Electronics, Inc. marginal tax rate is 35%. If Blake Electronics, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Blake Electronics, Inc cost of capital?
B. If Blake Electronics, Inc. raises capital using 30% debt, 5% preferred stock, and 65% common stock, what is Blake Electronics' cost of capital?
Find the forward price F of a forward contract maturing in 1 year, given that the current price of the underlying stock is 150 and that the 1-year risk-free return on bonds is 18%. Mike takes a loan of P dollars from a bank today. In return he has to..
Financial statements are critical tools for successful planning. Which statements provide the most information about the historical accomplishments of the firm
Asset utilization ratios
What are the benefits associated with your recommended strategy. What are the possible risks inherited with such a strategy.
A project has the following estimated data: price = $46 per unit; variable costs = $31 per unit; fixed costs = $19,000; required return = 15 percent; initial investment = $18,000; life = six years. Ignoring the effect of taxes, what is the accounting..
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You buy a new piece of equipment for $12, 539, and you receive a cash inflow of $2, What is the internal rate of return?
The dividend yield is defined as:
Future Semiconductors is evaluating a new etching tool. The equipment costs $1,169,000 and will generate after-tax cash inflows of $365,000 per year for six years. Assume the firm has a 18% cost of capital. What’s the NPV of the investment?
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.9%. What is the expected retur..
You have a chance to buy an annuity that pays $28000 at the beginning of each year for 5 years. You could earn 4.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
The Mayan Calendar Co. intends to liquidate all of its assets at the end of 2012 and pay out the proceeds as one giant dividend of $1,000 per share.
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