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1. Rubberman Corporation, a manufacturer of consumer plastic products, is evaluating its capital structure. The balance sheet of the company is as follows (in millions): Assets Liabilities Fixed Assets $4000 Debt $2,500 Current Assets $1000 Equity $2,500 In addition, you are provided the following information: (a) The debt is in the form of long term bonds, with a coupon rate of 10%. The bonds are currently rated AA and are selling at a yield of 12% (the market value of the bonds is 80% of the face value). (b) The firm currently has 50 million shares outstanding, and the current market price is $80 per share. The firm pays a dividend of $4 per share and has a price/earnings ratio of 10. (c) The stock currently has a beta of 1.2. The six-month Treasury bill rate is 8%. (d) The tax rate for this firm is 40%. I. What is the debt/equity ratio for this firm in book value terms? in market value terms? II. What is the debt/(debt+equity) ratio for this firm in book value terms? in market value terms? III. What is the firm's after-tax cost of debt? IV. What is the firm's cost of equity? V. What is the firm's current cost of capital? Please show all work in excel and highligh answer
What is the corresponding capitalization rate?
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ABC Corporation will earn $60 if it does well. The debtholders are promised payments of $35 if the firm does well. If corporation does poorly, expected earnings will be $30 and the repayment will be $20 because of dead weight cost of bankruptcy.
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The risk-free rate is 5% and the dividend yield on an index is 2%. What is the delta with respect to the index of a one-year futures on the index?
discuss the implications of the deviations from the purchasing power parity for countries competitive positions in the
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If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
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