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Twice Shy Industries has a debt−equity ratio of 1.5. Its WACC is 7.9 percent, and its cost of debt is 6.8 percent. The corporate tax rate is 35 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital % b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Unlevered cost of equity capital % c-1 What would the cost of equity be if the debt−equity ratio were 2? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity % c-2 What would the cost of equity be if the debt−equity ratio were 1.0? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity % c-3 What would the cost of equity be if the debt−equity ratio were zero? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
Dave Co. owns aging machines and is considering buying new ones. Dave Co. is considering replacing their older machines to take advantage of the higher potential day rates for their contracts over the next five years. Assume that Dave Co. faces a 40%..
Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond. What is the amount of Lebron's gross income from these items? Lydia and John Wickham filed jointly in year 1. They divorced in year 2. I..
John owns real estate with a fair market value of $1 million in which he has a basis of $250,000. In 2005, John sold the property to his son, Junior, for $1 million, subject to an installment note. Junior must pay the $1 million plus interest over 5 ..
What position in options should BNB take (buy calls, buy puts, sell calls, sell puts) to hedge its interest rate risk exposure?
Eddie's Bar and Restaurant Supplies expects its revenues and payments for the first part of the year to be: Sales payments January $24,000 $18,000 February $20,000 $21,300 March $35,000 $19,100 April $22,000 $22,400 May $28,000 $14,700 Eighty percent..
When two mutually exclusive projects are being compared, explain why the short-term project might be ranked higher under the NPV criterion if the cost of capital is high whereas the long-term project might be deemed better if the cost of capital is l..
Carey Enterprises sold equipment on January 1, 2015 for $10,000. The equipment had cost $48,000. The balance in Accumulated Depreciation at January 1 is $40,000. What entry would Carey make to record the sale of the equipment?
Growth Company's current share price is $20.30 and it is expected to pay a $0.85 dividend per share next year. After that, the? firm's dividends are expected to grow at a rate of 3.7% per year. What is an estimate of Growth Company's cost of equity? ..
Cash flow timing for accounts receivable. Zenotech Incorporated sells business software to a variety of companies. The payment for products and services varies across the Zenotech customers. Assume that Zenotech records all sales on the last day of t..
Marin Inc. has completed the purchase of new Dell computers. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
A project has a 0.76 chance of doubling your investment in a year and a 0.24 chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?
There is a 6.8 percent coupon bond with eight years to maturity and a current price of $1,071.30. What is the dollar value of an 01 for the bond?
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