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If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.25. The company has a target debt–equity ratio of .5. The expected return on the market portfolio is 12 percent, and Treasury bills currently yield 3.8 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 8.6 percent. The bond currently sells for $1,160. The corporate tax rate is 40 percent. a. What is the company’s cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company’s weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Retiring early. Over your future investing & retired life, assume you earn 8% [after expenses this time].
The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm? What should a zero coupon bond maturing for $1000 in 9 years..
Why do you believe some industries such as airlines rely heavily on debt, while others such as computers do not?
What is a eurodollar? If a French citizen deposits $10,000 in Chase Manhattan Bank in New York have eurodollars been created?
Suppose you have a bond with 5 years to maturity. what is the bond’s yield to maturity (YTM)?
Calculate the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 4.2 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal pla..
You are negotiating for the terms of a legal settlement, and your opponent’s attorney has presented you with the following alternative settlement alternatives:
Estimate the value per share of XYZ for each of the following sets of assumptions.
Camp Manufacturing turns over its inventory five times each year, has an average payment period of 35 days, and has an average collection period of 60 days. The firm has annual sales of $3.5 million and cost of goods sold of $2.4 million. Calculate t..
What is the intrinsic value of X Ltd.’s stock?
If Jackson deposits $90 at the end of each month in a savings account earning interest at a rate of 3%/year compounded monthly, how much will he have on deposit in his savings account at the end of 5 years, assuming he makes no withdrawals during tha..
some of the assumptions used in selecting both the method or type of valuation may be susceptible to psychological effects.
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