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Question: Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 10% as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. Its last dividend (D0) was $2.40, its expected constant growth rate is 5%, and its common stock sells for $27. EEC's tax rate is 40%. Two projects are available: Project A has a rate of return of 14%, and Project B's return is 9%. These two projects are equally risky and about as risky as the firm's existing assets.
What is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations. %
What is the WACC? Round your answer to two decimal places. Do not round your intermediate calculations.
What is the type of organization identified in the scenario?
Chuck Brown will receive from his investment cash flows of $3,135, $3,490, and $3,830 at the end of years 1, 2 and 3 respectively.
If the bond matures in 25? years, pays semi-annual ?coupons, and the yield to maturity is? 5%, then what will the bond sell? for?
You buy 100 shares in a no load mutual fund at its net asset value of $10 . During the year the mutual fund distributes $0.75 in dividend. You redeem the shares for their net asset value of $12.03 but the fund charges a 5.5 % exist fee. What perce..
Differentiate between random sampling and random assignment. Which is the most important in survey research, and why? Which is the most important in experimental research, and why?
Suppose practitioners learn that the ICE Benchmark Administration (IBA) will change the panel of banks used to calculate the yen LIBOR.
Coca-Cola's current stock price is $42.20. It plans to pay a dividend of $2.10 next year (e.g., at t=1) and analysts forecast that Coca-Cola's dividends.
The annual holding cost for these motors is $1. Calculate the economic run size for this hosuing. Elctric Sheep operates 250 days per year.
How much can you withdraw each month from your account assuming a 25-year withdrawal period?
Compute a fair rate of return for Intel common stock, which has a 1.2 beta. The risk free rate is 6 percent, and the market portfolio (New York Stock Exchange stocks) has an expected return of 16 percent.
Costs are equal to 20% of the same yearsales. The project net working capital is equal to 10% of the next year's revenue. The tax-rate is 35%. What are the project's net cash flows for years 0-3? What is the IRR on this project?
What entity determines the amount of securities needed in a securitization?
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