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-An all-equity firm expects its EBIT to be $160,000 every year in perpetuity. The firm currently has a cost of equity of 17.5 percent. The tax rate is 23 percent. The firm plans to borrow $186,000 at a pretax rate of 10.8 percent and use the proceeds to repurchase shares. What will the firm's cost of equity be after the recapitalization?
-A company is planning to issue perpetual, callable bonds with a coupon rate of 7% paid annually, and a par value of $1,000. The nominal interest rate on these bonds will be 9% for the next year. In one year, the nominal rate on the bonds will be either 10% with probability 0.6, or 8% with probability 0.4. The bonds are callable at $1200. Assuming the bonds are called if the interest rate decreases, what is the price of the callable bond today?
-A company is considering a project with an initial cost of $26,000. The project will produce a cash inflows of $16,000 at the end of the first year and $5,000 at the end of each of the following three years. The firm has a pretax cost of debt of 6% and a cost of levered equity of 10%. The debt-equity ratio is 0.34 and the tax rate is 20%. The project has the same risk as the firm. What is the net present value of the project?
Kay is saving $200 a month into an account earning 5% interest. How long will it take her to save $20,000?
How much money is required to invest today to have a lump sum of $100,000 in 40 years if the interest rate is 12.5% compounded yearly?
Discuss the three major legal forms of business organisation available to businesses together with their respective advantages
What return would he earn? What portion of this return represents capital gains, and what portion represents the current yield?
From an agency relationship standpoint, describe the possible types of problems or conflicts of interest that could inhibit maximizing a venture's value.
Required: For each of the adjustments recorded in E3-10, indicate by how much the assets, liabilities, and stockholders' equity in the December 31, 2012.
If Juicers must pay $90 million to acquire Fast Fruit, what is the NPV of the proposed acquisition? (Report your answer in millions of dollars.
Explain the exchange rate system that existed during the 1950s and 1960s. How did the Smithsonian Agreement in 1971 revise it?
What is the sensitivity of the portfolio to a one-basis-point increase in each vertex of the term structure?
Describe the differences between distributive and integrative negotiations.
The firm has decided on a capital structure consisting of 30% debt and 70% new common stock. Calculate the WACC and explain how it is used in the capital budgeting process. Calculate the after tax cash flows for the project for each year. Explain t..
What is the difference between the consuption CAPM model and the Intertemporal CAPM model?
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