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WACC: Common stock of the company KewCo. has a beta of 1.3. Treasury Bills provide a return of 4% and the market risk premium is 16%. Suppose KewCo. total value is composed of 60% equity and 40% debt (by market value). Debt yields of 8%. There are no shares of preferred stock in circulation.a. Find the cost of equity capital for KewCo
b. Suppose KewCo. has a total value, V of $1,000,000,000. If there are 15,000,000 shares of KewCo stock outstanding, what is the current price of a share of KewCo equity?
c. What is the WACC if the firm faces an average tax rate of 40%
d. Suppose KewCo is considering a project with an IRR of 12%, should it accept the project? Why or why not?
e. Suppose KewCo is considering a product line that will provide expected new net cash flows of $100,000 per year for 4 years. What is the maximum amount KewCo would be willing to pay for this new product line today?
Gary Wells Corporation consider to issue perpetual preferred stock with an annual dividend of $6.50 per share. If the required return on this preferred stock is 6.5 percent,
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Describe the bottlenecks that may occur in the new process
On an average day, a company writes checks totaling $1,500. These checks take 7 days to clear. The company receives checks totaling $1,800. These checks take 4 days to clear. The cost of debt is 9%. If the average daily float is $3,300, what is the n..
Which of the following is the most reliable source of information?
a defined-contribution pension plan
The company owns marketable securities of $100 million. It is financed with $200 million of debt, $50 million of preferred stock, and $210 million of book equity.
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Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 24% for two years and then at 4% thereafter. If the required return for Deployment Specialists is 9.0%, what is the intrinsic value of Deployment Specialists ..
Loretta Inc., has net sales of $760,000 and accounts receivables of $168,000. What are the firm's accounts receivables turnover?
If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?
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