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Dusit is financed 26% by debt yielding 8.3%. Investors require a return of 15.3% on Dusit’s equity.
a. What is the company’s weighted-average cost of capital if the corporate tax rate is 35%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Weighted-average cost of capital %
b. What would be the company’s cost of capital if it were exempted from corporate tax? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Consider a homebuyer/investor who plans to buy a new house, the price of which is 1 million dollars. Suppose the buyer does not have any initial savings for the down payment. That is, if the mortgage asks him to repay more than $ 50,000 per year (thi..
You deposit $2,500 today in a retirement account at 6% interest compounded annually. How much more money will you have if you leave it in a for 35 years rather than 25 years?
Your company has the opportunity to make an investment that promises to pay $24,000 after 6 years. If your company has a required return of 8.5% on this type of investment, what is the maximum amount that the company should pay for the investment? Wh..
The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 5% per year in the future. Shelby's common stock sells for $29.50 per share, its last dividend was $1.80, and the company will pay a dividend of $1.89 at the end o..
What variable would you concentrate your eff orts on and why? makesure properly cite your work if you are borrowing anything - type of equation works best and which industries this equation would not apply.
Today, interest rates on 1-year T-bonds yield 1.6%, interest rates on 2-year T-bonds yield 2.45%, and interest rates on 3-year T-bonds yield 3.5%. If the pure expectations theory is correct, what is the yield on 1-year T-bonds one year from now? Be s..
Which element should NOT be taken into account when determining the net present value of a series of cash flows?:
What are some good in depth questions to ask commercial bank business loans. officer (guest speaker) about acquiring a commercial loan?
A firm has sales of $4,840, costs of $2,640, interest paid of $179-depreciation of $493. The tax rate is 34 percent. What is the value of cash coverage ratio?
Present and future values for different interest rates-Find the following values. Compounding/discounting occurs annually. An initial $700 compounded for 10 years at 8%.
Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 9%, as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. What is its cost o..
It is very difficult for investors to remove their exposure to unsystematic risk. It is very easy for investors to remove their exposure to systematic risk. Stock A's stock has a beta of 1.30, and its required return is 12.00%. Stock B's beta is 0.80..
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