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(a) Swift plc has 10,000 shares. The current share price is £40, and the cost of equity is 13%. The company has also 1,000 bonds outstanding, with 13 years to maturity, a coupon rate of 8% and a face value of £1,000. The bonds make semiannual coupon payments and the current price is £856.25 per bond. The tax rate is 20%. What is the weighted average cost of capital (WACC) of the company?
(b) The Pizza Company has earnings before interest and taxes (EBIT) of £50,000 and market value debt of £100,000 outstanding with a 9% coupon rate. The cost of equity for an all equity firm would be 14%. The corporate tax rate is 35% and investors face a 20% tax rate on interest income and a 15% rate on dividend income. What is the value of Pizza Company's equity?
(c) Kelly Corporation is considering a two-year project. The net present value (NPV) of the project if it is all-equity financed is -£2,000 (negative). Kelly can also use a £200,000 bank loan to finance the project. The bank loan calls for annual fixed principal repayment. The corporate tax rate is 30%, and the cost of debt is 6% per annum. Assume that the debt is risk free. What is the adjusted present value (APV) of this project if the bank loan is used?
XOM corporation has a beta of 2.7. If the market has a return of 11% and the risk free rate is 3%, what is XOMs risk premium?
analysis of financial condition of a company under debt management.in april 1991 the owner and manager of pops
The company's stock has a beta of 1.8, the risk-free rate is 3.5%, and the market risk premium is 6%. What is your estimate of the stock's current price? Round your answer to the nearest cent.
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interest is said to drive the stock market. but interest is paid on bonds and loans while stocks pay dividends never
The daily interest rate on Treasury bills is .01 percent. What is the expected daily savings of the new system?
What does it mean for a company to "thin" its inventories? How would such a business practice aid a company during an economic recession?
What is one share of this stock worth to you if you require a 10% rate of return on similar investments?
The Allied Group is considering two investments. The first investment involves a packaging machine, which can be used to package garments for shipping orders to customers. The second possible investment would be a molding machine that would be use..
JP Vineyards has sales of $864,000, a gross profit margin of 0.398, and inventory of $176,000. What is the company's inventory turnover ratio?
Martha is playing a coin-toss game in which she tosses two coins. The probability of heads on the second coin is correlated with correlation ? = 0.6.
Jeremy will turn 30 years old and plans to use his savings toward the down payment on a house. If his investment in a mutual fund will earn him 11.70 percent annually, how much will he have saved in eight years when he buys his house.
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