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Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0%. Its cost of preferred stock is 11.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $250 million of debt, $55 million of preferred stock, and $195 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $64 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $236 million?
If you require an effective annual return of 10 percent on this investment, how much will you pay for the contract today?
What is the beta of an efficient portfolio with E(Rd= 20% if Rf = 5%, E(Rm) = 15%, and o- „, = 20%? What is its rr? What is its correlation with the market?
The firm has 1,000,000 shares of common stock outstanding. Compute the firm’s book value of equity per share.
A call option has an exercise price of $55 and matures in six months. What is the price of the call if the standard deviation of stock is 0 percent per year?
Based on these data, estimate the inventory loss.- If the industry average gross profit was 50%, why might the insurance company be leery of the estimated loss?
The amount by which a project increases the value of the firm is given by which of the following?
Solve for the unknown number of years in each of the following: (Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).) Present Value Years Interest Rate Future Value $ 550 10 % $ 1,488 800 11 1,922 18..
A firm has an enterprise value of $640 million. What is the price per share? what is its free cash flow?
What is the firm’s sustainable growth rate? If the firm grows at its sustainable growth rate, how much debt will be issued next year?
Calculate the net proceeds to Renee’s from the sale of the debt.
Instead of using a decision tree analysis, use the Black-Scholes Option Pricing Model to analyze this investment timing option.
If you sell $10,000,000 nominal value of S&P 500 futures contracts, what is the return of the combined stock and stock index futures contract?
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