User Account

All Pages

What is the firm market capitalization

Assignment Help Finance Basics
Reference no: EM131473082

A firm has a Capital Structure as follows: Market Value of their debt Is $2,000,000, Preferred stock is $1,000,000. There are 500,000 shares of stock outstanding, with a market value of $20 per share.

The preferred stock price is $50 and pays a $4 dividend. The common stock sells for $20 and pays a $1.00 dividend that is expected to grow by 2% per year. The bonds currently sell for $818, and the coupon rate of 5%. The bonds will mature in 10 years. The firm's tax rate is 40%.

The company generates $10,000,000 is sales, expenses are $6,000,000. The initial investment of $1,000,000 is depreciated straight-line over 10 years. 

1. What is the firm's Market Capitalization? _________________. 

2. What is the cost of the preferred stock? ________. 

3. What is the cost of the common stock? ________. 

4. What is the cost of the bonds? ________ . 

5. What is the firm's WACC? __________ . 

6. What is the OCF____________? 

7. Basedon their Initial investment $1,000,000, what is the NPV of this 5- year projectusing the firm's WACC that you calculated in #5 ______________? 

8.     Basedon their Initial investment $1,000,000, what is the IRR of this 5- year projectusing the firm's WACC, that you calculated in #5 ______________? 

9.     Would you invest in this project? __________. 

10. Explain why_________________.

Reference no: EM131473082

Questions Cloud

Explain the stale and managed pricing phenomenon : Explain the stale and managed pricing phenomenon discussed in the private equity literature. What is the influence of these effects on private equity returns.
Write a professional business letter to the vendor inquiring : Your assignment is to write a professional business letter to the vendor inquiring about the bill and the vendor's billing practices.
Where are pacific white-sided dolphins found : What is the taxonomic classification of Pacific white-sided dolphins? You should report the Kingdom, Phylum, Class, Order, Family, Genus and Species.
Discuss the advantages of investing in venture capital : In the field of venture investing, why is performance persistence investing considered to be puzzling?
What is the firm market capitalization : What is the firm's Market Capitalization? What is the cost of the preferred stock?
Hefstedes theory of cultural dimensions : Please do not copy info right from the net Describe your cultural background in light of Hefstede’s theory of cultural dimensions.
Written contract of the clinical project : GCNCP3 project. Submit a written contract of the clinical project they may wish to undertake before they set out to achieve their contractual clinical learning
What are their roles in the investment process : Many cases of venture capital investing involve general partners and limited partners. Why are such partnerships necessary, and what are their roles.
Calculate dollars of ticket sales needed to earn a target : Calculate the dollars of ticket sales needed to earn a target profit of $6,000. Calculate dollars of ticket sales needed to earn a target profit of $12,000.

Reviews

Write a Review

Finance Basics Questions & Answers

  Factors considered when estimating a projects ninv

Cash flows for a particular project should be measured on an incremental basis and should consider all the indirect effects of the project. What does this involve?

  What is the theory of interest rate parity

What is the theory of interest rate parity? What is covered interest arbitrage? Describe two techniques that a company can use to hedge against transaction exchange risk.

  Discuss the results of the outsourcing decision

Identify a real-life outsourcing decision that has been made. Identify the specific reasons for the outsourcing. If information is available, discuss the results of the outsourcing decision (jobs lost, cost savings, etc.).

  Christine is a new homebuyer she wants to make sure that

christine is a new homebuyer. she wants to make sure that she incorporates the cost of maintenance into her decision.

  If one stock in a value-weighted portfolio goes up in

if one stock in a value-weighted portfolio goes up in price and all other stock prices remain the same what trades are

  Why is fungibility an important feature of futures contracts

Describe the delivery process for futures contracts. Why does delivery rarely take place in futures contracts?

  Bron inc has total current assets of 800000 total current

byron inc. has total current assets of 800000 total current liabilities of 450000 long-term assets of 300000 and

  Hedge against changes in the level and the slope of yield

You currently hold a 7-year fixed rate bond 5% annually.  You would like to hedge against changes in the level and the slope of the yield curve and you plan to use a 1-year zero coupon bond and a 7-year zero coupon bond.  Use the following table to c..

  Assume that the one-year probability of default is 4 the

mr. rosenquist asset manager holds a portfolio of sek 200 million which consists of bbb-rated bonds. assume that the

  Compute the unit product cost

HJ Turner Company produces a single product. Information concerning the company's operations last year appear given below:

  Evaluate the impact of global financial markets on u.s

Imagine one large global financial market. Describe how it would function and the affect it would have on the global economy.

  Define the phrases or sentences with reasons

In a job costing system, it is necessary to divide up the business into departments. Fixed costs (or overheads) will be collected for each department. Where a particular fixed cost relates to the business as a whole, it must be divided between the..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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