Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
ModMill Real Estate Company is an all-equity firm with 15 million shares of common stock outstanding worth $32.50 per share. ModMill is planning to purchase a huge track of land in southeastern Texas for $100 million. The land will subsequently be leased to tenant farmers, increasing ModMil's annual expected pre-tax earnings by $25 million in perpetuity. The firm's unlevered cost of equity capital is 12.5%. ModMill is subject to a corporate tax rate of 40%. If it were to issue debt, the interest rate on ModMill's bonds would be 8% per annum. Assume that the market is semi-strong form efficient.
(a) Suppose ModMill decides to issue equity in order to finance the purchase.
(i) What is the net present value of the project?
(ii) ModMill has just announced that the firm will finance the purchase using equity. What is the new price per share of the firm's stock? How many shares will ModMill need to issue in order to finance the purchase?
(b) Suppose ModMill decides to issue debt in order to finance the purchase.
(i) What will the market value of ModMill be if the purchase is financed with debt?
(ii) What is the price per share of the firm's stock after the debt issue?
what are the optimal markups for widgets and gadgets Marginal revenue = Price(1 + 1/Price elasticity) since price is positive (always) so we can ignore that part when determining the sign of MR MR is negative if 1+1/elasticity is negative and positiv..
A green algae, can produce hydrogen when temporarily deprived of sulfur for up to 2 days at a time. A company needs to purchase equipment costing $3.4 million. If the company wants to earn a rate of return of 20% per year and recover its investmen..
Suppose that the Phillips curve is given by ?t-?t^e= 0.1-2?t where ?t^e=?t-1 Suppose that inflation in year t-1 is zero. In year t, the authorities decide to keep the unemployment rate at 4% forever. 1. Compute the natural rate of unemployment.
Assuming the oversimplified multiplier is correct, Supposing the GDP is currently $25,000 and themarginal propensity to consume is .50. If autonomous investment increases by $5,000, what will GDP be in the new equilibrium
Need help with my Logistics Reasearch Proposal. The topic I selected is "Managing Uncertainty". In the instructions it states that in the paper it must integrate the University's Core value of integrity into paper in some form
The plant has a capacity output of 200,000 calculators per year, and the plant's manager regards 75 percent of capacity as the normal or standard output. The projected total variable costs for the normal or standard level of output
The following are the inverse demand curve and MR curves for a monopolistically competitive firm. P = 1000 - 2Q MR = 1000 - 4Q Where P is the price of the product and Q is the level of production. For the 200th unit of Q, MR is equal to.
A small nation permits free trade in good X. At the good's free-trade price of $8, domestic firms supply 6 million units and imports account for 4 million units. Recently the small country has ereted trade barriers with the result that imports hav..
A total of $50,000 is borrowed and repaid with 60 monthly payments, with the first payment occurring 1 month after receipt of the $50,000. The stated interest rate is 6 percent compounded quarterly.
Use the capital-asset pricing model to predict the returns next year of the following stocks, if you expect the return to holding stocks to be 12 percent on average, and the interest rate on three-month T-bills will be two percent.
What is the marginal product of the third worker What is the marginal revenue product of the second worker What is the marginal cost of the fourth worker Based on your knowledge of marginal analysis, how many workers should you hire
Discuss the signs and magnitudes of the estimated coefficients and their comparisons to predicted or theoretical signs and magnitudes. What have we learned?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd