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Walmart Corporation has a target capital structure consistingof 20 percent debt, 20 percent preferred stock, and 60 percentcommon equity. Assume the firm has insufficient retained earningsto fund the equity portion of its capital budget. Its bonds have a12 percent coupon, paid semiannually, a current maturity of 20years, and sell for $1,000. The firm could see, at par, $100preferred stock that pays a 12 percent annual dividend, butflotation costs of 5 percent would be incurred. Rollins' beta is1.2, the risk free is 10 percent, and the market risk premium is 5percent. Rollins is a constant growth firm that just paid adividend of $2.00, sells for $27.00 per share, and has a growthrate of 8 percent. The firm's policy is to use a risk premium of 4percentage points when using the bond-yield-plus-risk-premiummethod to find ks. Flotation costs on new common stock totals 10percent, and the firm's marginal tax rate is 40 percent.
1. What is Rollins' WACC?
2. What is Rollins' cost of preferred stock?
Assuming all payments, except the first $2 million are paid at the end of each year and the discount rate is 9% what kind of deal did the soccer player snag?
Under cumulative voting procedures, how many directors can the dissident stockholders elect with the proxies they now hold? How many directors could they elect under majority rule with these proxies?
Comfortable Hands is a corporation that features a product line of winter gloves for the entire family men, women, and the children. They are trying to decide what mix of these 3 kinds of gloves to produce.
How much more must Keith save each year (suppose end of the year payments) for each of next eight years to have enough savings to pay for his daughter? Assume Keith can earn 9% on his savings.
What is PM Company's optimal organizational structure? How does it impact PM Company's international market expansion plans?
The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock.
Why might a multinational corporation decide to borrow in a country such as Brazil, where interest rates are high and Explain the difference between the accept/reject decision and the raking decision.
If you deposit money today in an account that pays 8.6% annual interest, how long will it take to double your money? Round your answer to the nearest whole.
You are going to be given $79,000 in 15 years. Assuming an inflation rate of 2.4%, what is the present value of this amount?
What is Ho and Ha? Find the following: critical values, rejection region. Decide to reject or fail to reject the null hypothesis. Interpret.
The firm's new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks' average. If this were done, by how much would inventories decline? Use a 365-day year.
Your firm's offer consists of weekly payments for one year at an interest rate of 3 percent. What is the amount of each payment?
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