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Cede & Co. expects its EBIT to be $55,000 every year forever. The firm can borrow at 7 percent. The firm currently has no debt, its cost of equity is 11 percent, and the tax rate is 35 percent. Assume the firm borrows $153,000 and uses the proceeds to repurchase shares.
What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Cost of equity %
What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
WACC
Assume that European countries impose a quota on goods imported from the United States and that the United States does not plan to retaliate. - How could this affect the value of the euro? Explain.
Continuing with the example given in the previous problem, assume that Germany and Japan produce their own cars and beer and allocate half their labor force.
1. Dave has had a segregated contract for five years. Each year his deposits have been $5,000. Three years ago capital losses of $1,500 were allocated to Dave's
Explain how activity-based costing differs from the full costing method. How can activity-based costing be applied to the service sector when the 'activities' that it seeks to analyse tend to be related to manufacturing?
Explain why it is difficult to simultaneously control the money supply and the federal fund rate (discount rate).
If the appropriate discount rate is 7% annually, what is present value of the girl's fortune?
Borrow $10,200 from the First National Bank at a fixed rate of 12% per annum, simple interest. The loan would be repaid in equal monthly installments over a 3 year period.
How much money will you have in your account at the end of the second year assuming continuous compounding?
Provide information about the initial simulated purchase price of your bonds. The following are several good online resources for bonds
Examine the successes and problems of multinational enterprises (MNEs) in exploiting the opportunities in emerging markets.
Pelamed Pharmaceuticals has EBIT of $345 million in 2006. In? addition, Pelamed has interest expenses of $139 million and a corporate tax rate of 21%.
How are compounding and discounting related? Explain time value of money.
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