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Alvarez River Holdings, which has a beta of 1.5, is in the process of expanding and raising new capital through an initial debt offering. The company has a target capital structure consisting of a debt to value ratio of 35%. The debt issue has a maturity of 25 years, a face value of $1,000, and will be issued at par with 4%flotation costs. The annual coupon is 7.60% which is paid semi-annually. The company is expected to pay a dividend of $1.20 next year and it should grow at 7% per year indefinitely. Analysts expect the market index to grow at 6% per year indefinitely, and the index currently has a dividend yield of 2.0%. The risk free rate is 3% per year. If the marginal tax rate is 40%, what is the weighted average cost of capital for Alvarez? show work.
Titan Inc. is considering introducing a new type of toy for cats. Titan expects the toys to become obsolete after five years when it will be discovered that toys only encourage cats to get anxious. What are the expected future cash flow regarding the..
If the market rate of interest were to be 3.6%, what would the value of the bond be?
What is the estimated cost of common equity using the CAPM?
Gay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1.25). The stock sells for $32.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever..
Filer Manufacturing has 8 million shares of common stock outstanding. The current share price is $87, and the book value per share is $6. Filer Manufacturing also has two bond issues outstanding. What are the company’s capital structure weights on a ..
Your firm just purchased $100,000 in goods from your supplier on trade credit terms of 2/10 net 30. Your opportunity cost of funds is 9%. What is the present value savings that would be earned if your firm makes the payment on the last day of the dis..
Pecos Manufacturing has just issued a 15-year, 12% coupon interest rate, 1000-par bond that pays interest annually. Assuming that the required return does remain at 14% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9..
Financial analysts forecast GDY Inc.’s growth for the future to be 3%. GDY's recent annual dividend was $2.00. What is the value of GDY stock when the required return is 11%?
What is the after-tax expected dollar cost of issuing a 10-year franc bond if the French corporate tax rate is 40%?
What is estimated cost of goods sold and gross margin for July, What is the estimated finished goods inventory balance at the end of July,
Cleveland Corporation has 18,990,000 shares of common stock outstanding, its net income is $169 million, and its P/E is 15.5.
Olin Inc plans a project that will generate revenues of $10 million. Calculate the amount of NWC the firm will need?
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