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A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at a price of $638.11. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places.
You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $11.8 million, which will be depreciated straight-line to zero over its four-year life.
Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 17...
What is the average contribution to net income across all four years?- What is the average book value of the investment?
Compare the various forms of business ownership as found in our textbook--Chapter 5. What are the advantages and disadvantages of each form? Which one would be best for a small business, or one intending to increase in size? What advice would you off..
Atlantis Fisheries issues zero coupon bonds on the market at a price of $489 per bond. These are callable in 6 years at a call price of $580. Using semi annual compounding, what is the yield to call for these bonds?
General Matter’s outstanding bond issue has a coupon rate of 8.8%, and it sells at a yield to maturity of 8.00%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at face..
Which of the following statements is true about the efficient market hypothesis?
The Detroit candy company has a DOL of 2.80. A 3% increase in operating income (EBIT) caused its net income to increase by 11.85%. How would a 2% decrease in sales affect the firm's net income?
Pick a brand. Attempt to identify its sources of brand equity. Assess its level of brand awareness and the strength, favorability, and uniqueness of its associations.
You are evaluating two investment alternatives (to be your only investment along with riskfree assets). One is a passive market portfolio with an expected return of 10% and a standard deviation of 16%. What is the maximum fee your broker could charge..
You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $193,000 per year for the next two years, or you can have $75,000 per year for the next two years, along w..
Common stock with a current market value of $33.42 per share issues a quarterly dividend of $0.40. What is its current annual dividend yield? An investor pays $8,750 for a $10,000 corporate bond with a 4.75% coupon (interest rate). What is the bondho..
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