What is the expected return on the stock

Assignment Help Accounting Basics
Reference no: EM133043761

Question - The common stock and debt of Northern Sludge are valued at $320 million and $80 million, respectively. Investors currently require a 16% return on the common stock and an 10% return on the debt. Assume that the change in capital structure does not affect the risk of the debt and that there are no taxes.

If Northern Sludge issues an additional $30 million of common stock and uses this money to retire debt, what is the expected return on the stock?

Reference no: EM133043761

Questions Cloud

What is the firm tie ratio : In the past year, KGT had revenues of $30 million, cost of goods sold of $2.5 million, and depreciation expenses of $200,000. What is the firm TIE ratio
Evaluate the program of wipro : As a manager, critically evaluate the program of Wipro and list its long term benefits for the organisation. Answer in more than 500 words.
Financial domin-social networking sites : Identify countermeasures to minimize company information exposure on social networking sites.
Trends in employment safety : Over the last 50 years, the United States labor economy has changed from a manufacturing to service and technology focus. Other than the obvious changes, such a
What is the expected return on the stock : If Northern Sludge issues an additional $30 million of common stock and uses this money to retire debt, what is the expected return on the stock
Applying a talent management approach : "For channel partners interested in taking on cloud's climb, the gap in cloud infrastructure/applications talent - the third most sought after skills area - is
Most popular applications : Define text mining, and discuss its most popular applications.
How much will each annual payment be : The savings account pays 4.79 percent per year, compounded annually. How much will each annual payment be
Canadian union members and unionized workplaces : Describe some of the characteristics of Canadian union members and unionized workplaces.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd