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Hero Manufacturing has 9 million shares of common stock outstanding. The current share price is $72 and the book value per share is $3. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6.4 percent and sells for 109.5 percent of par. The second issue has a face value of $57.8 million, a coupon rate of 8.3 percent and sells for 113.3 percent of par. The first issue matures in 7 years, the second in 27 years.
Problem 1: Suppose the company's stock has a beta of 1.1. The risk-free rate is 3.3 percent and the market risk premium is 7.2 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 22 percent. What is the company's WACC?
North/South Airlines generated the following information from its financial statements: What are North/ South's (a) return on assets (ROA) and (b) total assets turnover?
the following data are available for sellco for the fiscal year ended on january 31 2011sales . . . . . . . . . . . . .
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For tax purposes, it uses the accrual method and would prefer to defer the income from the ticket sales until it performs the concerts. This is the first time that it has sold tickets one or two years in advance. Michael Stipe has asked your advic..
The yield to maturity on new issues of similar corporate bonds is 5.2%. Someone offers you $1,225 for your bond. Is this a fair price, to you the seller? Illustrate what is the fair price?
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Using the B/S prepared at the end of FY 2008 and FY 2009, compute the change in CASH that occurred during the FY 2009. Refer to the Statement of Cash Flows to disaggregate the change in CASH as cash flows from operating activities (CFO)
$600,000 face value, 5% bonds with a 5 year maturity at a Premium with a price of 102. What is the total bond interest expense over the life of the bonds?
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