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The total market value of the equity of Okefenokee Condos is $14 million, and the total value of its debt is $6 million. The treasurer estimates that the beta of the stock currently is 0.6 and that the expected risk premium on the market is 10%. The Treasury bill rate is 6%, and investors believe that Okefenokee's debt is essentially free of default risk.
a. What is the required rate of return on Okefenokee stock? (Do not round intermediate calculations. Enter your answer as a whole percent.)
b. Estimate the WACC assuming a tax rate of 40%. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
c. Estimate the discount rate for an expansion of the company’s present business. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
d. Suppose the company wants to diversify into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is .8. What is the required rate of return on Okefenokee’s new venture? (Do not round intermediate calculations. Enter your answer as a whole percent.)
what is the rate of return on the fund?
You have been given that a 6-month 100 Call option on XYZ stock is trading at $4.25. A put with the same strike price and expiration is trading @ $1.25. If the current price of the sock is 102, what is the implied interest rate?
Calculate Company C’s weighted average cost of preferred stock, given the following information: (a) Coupon Payments: $5.00, (b) Price of Preferred Stock: $42.50, (c) Debt: $5,000,000, (d) Equity: $3,000,000, and (e) Preferred Stock: $500,000.
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Noninstallment credit includes, A personal line of credit acts very much like, With a home-equity line of credit the collateral is.
Choose a firm/company that uses several different types of marketing communications to promote their products. Identify the firm and products you have selected to discuss. There are many ways a firm could promote its products. Different firms approac..
Consider a perpetuity that pays $1,000 per year; the market rate of interest is 10%. What is the PV of the perpetuity?
The Copious Brewing Company (CBC) is considering two expansion plans. The first, Plan A, is to spend $50 million on a state-of-the-art large scale, green, fully integrated brewery which will provide an expected cash flow stream of $8 million per year..
Equity Securities On January 1 you buy a stock priced at $72 per share. At the end of the year you sell the stock for $65.95.
Planning and Budgeting in Health Human Services Finance Mode. Discuss the differences between a simple budget and a flexible budget. Be sure to include specifics related to the impact on variance analysis.
If present interest rates are 10% and the investment rate on the funds to be received from the new issue cannot exceed 10%, what amount must Nutty Hospital borrow today?
You can earn .47 percent per month at your bank. If you deposit $3,000, how long must you wait until your account has grown to $6,000?
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