User Account

All Pages

What is the total market value of debt

Assignment Help Financial Management
Reference no: EM131537592

SFE Inc. has 1 million shares of common stock outstanding at a book value of $40 per share. The stock trades for $50 per share. It also has $10 million in face value of debt (corporate bonds of 5 years with coupon rate 10.4%, paid semi-annually) that trades at 110% of face value. The company’s common stock has abeta of 1.2. Treasury bills yield 2% and the market return is 10%. The corporate tax rate is 35%.

a) What is the total market value of equity?

b) What is the total market value of debt?

c) What is its ratio of debt to total firm value in the market-value driven capital structure?

d) What is the (annualized) before-tax cost of debt?

e) What is the after-tax cost of debt?

f) What’s the cost of equity?

g) What’s the after-tax WACC?

h) SFE is considering a project that costs $500,000 today. The project returns$150,000 each year, for the next five years. What is the NPV of the project?

Reference no: EM131537592

Questions Cloud

Capital by considering its risk relative to that of the firm : In Subjective Approach, we determine a certain project/division’s cost of capital by considering its risk relative to that of the firm.
What is beta of your portfolio : What is the beta of your portfolio?
Explain using the demand and supply curve for fx rates : Explain using the demand and supply curve for FX rates, what would happen to the US FX rate if:
Combat the problem of fast changing nature of technology : How to combat the problem of the fast changing nature of technology.
What is the total market value of debt : What is the total market value of equity? What is the after-tax cost of debt? What is the total market value of debt?
What is approximate percent change in price of bond : sing convexity, what is the approximate percent change in the price of the bond?
What is the cost of new common equity considering : What is the cost of new common equity considering the estimate made from the three estimation methodologies?
Financial leverage and operating leverage : Explain why you might expect to observe a negative correlation between financial leverage and operating leverage.
Banking system and the federal reserve system : Show the respective changes for balance sheet accounts for this open market operation for the non-bank public, the banking system and Federal Reserve System.

Reviews

Write a Review

Financial Management Questions & Answers

  What is project npv in the worst-case scenario

The most likely outcomes for a particular project are estimated as follows: What is project NPV in the worst-case scenario? What is project NPV in the best-case scenario, that is, assuming all variables take on the best possible value?

  Lead to an increase in organizational effectiveness

Describe the relevance of communication in the organizational process. Suggest three ways that the managers can improve communications that will lead to an increase in organizational effectiveness.

  What is effective tax rate and before tax equivalent yield

What is the effective tax rate and before-tax equivalent yield?- How would you evaluate the tax benefits of this investment?

  What is the amount of profit or loss ignoring brokerage fees

If an investor buys a 100-share put option for $400 with an exercise price of $40 and the underlying price per share of the stock at expiration is $32, what is the amount of profit or loss, ignoring brokerage fees?

  Compute the stocks earnings per share

Compute the stock's earnings per share (EPS). Determine what the stock's dividend yield would be if it paid $2.88 per share to common stockholders.

  Measured by the standard deviation

ABC College is considering an investment in one of two common stocks to add to the employees' retirement portfolios. Given the following information, which investment is better, based upon the risk (as measured by the standard deviation) and return o..

  What is irwins annual dividend yield

What is Irwin's annual dividend yield?

  Portfolio analysis-portfolio return and risk analyze

Combine all the research and data you have completed for the Final Project assignments from Weeks 2–4, along with your results from this week: •Week 2: Amortization •Week 3: Portfolio Analysis •Week 4: Government Securities •Week 5: Portfolio Return ..

  The amount of trust property includible in Ds gross estate

Assuming the trust had a value of $6,000,000 at D's death, the amount of trust property includible in D's gross estate,

  International arbitrages exist in foreign exchange market

Why do international arbitrages exist in foreign exchange market?

  Units-of-production depreciation for financial reporting

At the beginning of 2013, Norris Company had a deferred tax liability of $7,000, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. Norris had a retained earnings balance of ..

  What was your percent return for the past year

HydroTech Corp stock was $50 per share a year ago when it was purchased. Since then, it paid a $3 per share dividend. The stock price is currently $52. If you owned 500 shares of HydroTech, what was your percent return for the past year?

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