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UK firm has issued 1 million shares which have a book value of £5 per share. The firm's market to book ratio is 2.5. It has several 10 year bonds outstanding which are trading at 108.50 and have an annual coupon of 5%. The book value of its debt is £7 million. If its cost of equity is 10.25%. If the corporate tax rate is 30%, what is this firm's WACC? Express your answer as a percentage, rounded to 2 decimal places, eg. 5.55.
The Strik-it-Rich Gold Mining Company is contemplating expanding its operations. To do so it will need to purchase land that its geologists believe is rich in gold. Strik-it-Rich’s management believes that the expansion will allow it to mine and sell..
Jimmy wants to contribute either $5,500 (BT$) to a traditional deductible IRA, or $5,500 (AT$) to a Roth IRA. His current tax rate is 30% for ordinary income and 20% for capital gains. He expects his IRA investment to earn a 12% before-tax rate of re..
As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B. The table below shows information about the performance of stocks A and B last year. Based on these factors, what stock would you recomme..
The common stock of Eddie's Engines, Inc. sells for $45.08 a share. The stock is expected to pay $3.50 per share next year. Eddie's has established a pattern of increasing their dividends by 5.6 percent annually and expects to continue doing so. What..
The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.30 above full cost. Management estimates that the variable cost of the globe will be $70 per unit and fixed costs per year will ..
A friend of yours just bought a new sports car with a $5,000 down payment, and her $30,000 car loan has an interest rate of .75% per month for 48 months. After 2 years, the "Blue Book" value of her vehicle in the marketplace is $15,000. How much does..
Jiminy Cricket Removal has a profit margin of 9 percent, total asset turnover of 1.07, and ROE of 14.39 percent. What is this firm’s debt-equity ratio?
should you sell the bond or should you convert the bond into common stock and then sell the stock?
An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $400 at the end of Year 5, and $500 at the end of Year 6.
What will be the face value of the bonds (i.e., the amount due on the date of maturity)?
A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100:03. What is the invoice price of the bond? The coupon period has ..
The Elkmont Corporation needs to raise $52.4 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. How many shares need to be sold?
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