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Weston Industries has a debt–equity ratio of 1.6. Its WACC is 8.4 percent, and its pretax cost of debt is 6.9 percent. The corporate tax rate is 35 percent. a. What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital % b. What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Unlevered cost of equity capital % c-1. What would the cost of equity be if the debt–equity ratio were 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity % c-2. What would the cost of equity be if the debt–equity ratio were 1.0? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity % c-3. What would the cost of equity be if the debt–equity ratio were zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %
Write the piece-wise function that defines this portfolio’s profits. Why would an investor pursue this strategy?
To minimize the effects and expansion of climate change, many nations, particularly those in Europe, are pushing hard for a global reduction in the use of. In the U.S., an employer may engage in employee discrimination if it is "reasonably necessary ..
Two friends contact you about an oppurtunity to make big money. Their idea is to start a business to market a new video game system. They estimate that it will take $5-10 million to begin productionand they want to raisemoney by selling shares in the..
Stock A has a beta of 1.7 and has the same reward-to-risk ratio as stock B. Stock B has a beta of 0.8 and an expected return of 12 percent. What is the expected return on stock A if the risk-free rate is 4.5 percent? A portfolio that consists of $8,1..
An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A is 25% while the standard deviation on stock B is 14%. The correlation coefficient between the return on A and B is 0.40. What is the s..
If a firm has purchases of $50,000, a starting inventory of $35,000 and the cost of goods sold is $45000, what is the dollar amount of its ending inventory?
Whole Foods’ current dividend per share is $1.07. You expect dividends to grow at 5% per year into perpetuity. Whole Foods’ beta is 0.85. The current riskfree rate is 2.9%, and the expected return on the market portfolio is 7.4%. what is the intrinsi..
You plan to buy a house in 9 years. You want to save money for a down payment on the new house. You are able to place $182 every month at the end of the month into a savings account at an annual rate of 14.82 percent, compounded monthly. How much mon..
Define "horizontal analysis”: step-by-step instructions on how to do it and why it is used. Please give two numerical examples. State if it has improved, deteriorated, or unchanged.
Consider an investment opportunity set formed with two securities that are perfectly negatively correlated. The global minimum-variance portfolio has a standard deviation that is always _________.
Advance, Inc is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has a coupon rate of 9 percent annually. What i..
What position in the stock is necessary to hedge the trader’s position at the time of the trade?
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