Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
NechMenTin, Inc., has given the following information to you. They want you to calculate their weighted average cost of capital. The company has always followed their ideal capital structure which the management insists is 40% debt and 60% equity capital. The company can issue bonds for 9% coupon rate. The interest is paid semi-annually. The bonds have 22 years to maturity. The bonds can be issued to net the company $835.42 with a maturity value of $1,000. The company's marginal tax rate is 40%. For cost of equity, the company uses the CAPM based on SML. The risk free rate in the market is 8% and the market rate of return is 14%. The company has a beta of 1.1.
What is NechMenTin's before tax cost of debt?
A. 11%
B. 12%
C. 10%
D. 8%
What is NechMenTin's after-tax cost of debt?
A. 6.6%
B. 7.2%
C. 6%
D. 4.8%
What is the company's cost of equity capital using the CAPM?
A. 9.6%
B. 8%
C. 14.6%
D. 12.09%
A. Roul, a new investment banker contends that the company's cost of capital is 8.6%. Based on the answers from the three questions above, what is the actual weighted average cost of capital for NechMenTin, Inc?
A. 10.02%
B. 11.40%
C. 12.86%
D. 14%
Examine the pros and cons of a sinking fund from the viewpoint of both a firm and its bondholders. Determine the fundamental manner in which this knowledge could be helpful to a financial manager. Provide a rationale for your response
Six months ago, a bond had a coupon rate of 11.14 percent, par value of $1000, YTM of 11.72 percent, and semi-annual coupons.
After that time, they feel the business will be worthless. Marko has determined that a rate of return of 11 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
Are currency correlations perfectly stable over time? What does your answer imply about using past data on correlations as an indicator for the future?
If the firm could purchase a press that would provide slightly better quality and $26,000 annual cash inflow for 10 years for a price of $120,000 which alternative would you recommend? Why?
Under the MM extension with growth, what is the value of your firm's tax shield, i.e., how much value does the use of debt add?
You are considering adding a microbrewery on to one of your firms existing restaurants. This entails an investment of $40,000 in new equipment. This equipment will be depreciated straight line over five years. If your firm's marginal corporate tax ra..
What per visit price must be set for the service to break even? To earn annual profit of $100,000?
1. What is the bond's yield to call (YTC)? 2. If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?
List two reasons why you might prefer IRR over NPV. List two reasons why you might prefer NPV over IRR.
Prepare a research paper directly related to a significant subject in small business/entrepreneurial Finance. Papers will be 3 pages with at least 3 credible sources to be identified and appropriately referenced.
the seattle walks is an annual fund-raising event that raises money for research on childs autism. the walk costs 80000
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd