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a. What is Weighted Average Cost of Capital (WACC)? Identify TWO (2) factors that affect the WACC of a company.
b. Would the firm's cost of external equity capital be the same as the required rate of return on the firm's outstanding common stock? Why or why not?
1- Using debt can help reduce the agency problem that may arise between the management of a company and its shareholders. Explain.
2- Explain the effects of the following on the company's weighted average cost of capital:
i) Floatation cost
ii) Reduction in corporate tax
1. Offer three reasons with full explanation for why it is important for companies to keep a fair portion of their overall asset balance in liquid assets.
Assuming a real risk-free rate of 2% and a maturity risk premium that equals 0.1 x (t)% where t is the number of years to maturity, estimate the interest rate in January 1981 on bonds that mature in 1, 2, 5, 10 and 20 years. Draw a yield curve bas..
the zero rate curve is flat at 6 pa with semi-annual compounding. what is the value of a fra where the holder receives
To which of the following benefits would the survivors of a deceased worker who was currently insured only be entitled?-a spousal benefit at age 60 -a widow(-er) with dependent children's benefit
The investment bankers require an underwriting spread of 3% of the offering price, and the company's legal, accounting and printing expenses associated with the seasoned offering are estimated to be $750,000. How many new shares must the Mitchell ..
Compute the current yield and the promosed yield (use semianual compunding) for the bond the Carters currenty hold and for wach of the three swap candidates
What is the tax equivalent yield of a 10 year general obligation bond issued by the City of Burlington with a coupon of 4.5% if the assumed marginal tax rate is 40%?
1. youre interested in a retirement plan for employees that allowsthem to invest before tax dollars in a tax deferred
Calculate the 6 monthly discount factors D(t) and the semi-annual zero coupon rates z(t), where t = 0.5, 1, 1.5, ., 9.5, 10. (2) Using the discount factors derived in (1), calculate the price of a 4½ year semi-annual coupon bond with an annual coupon..
what is the cost of the preferred capital of a firm whose currently outstanding preferred shares pay a dividend of
If a firm has a target inventory of $40,000, a starting inventory of $25,000 and the cost of goods sold is $35000, what is the dollar amount of its purchases?
You purchase a bond with a coupon rate of 7 percent, semiannual coupons, and a clean price of $1,011. If the next coupon payment is due in four months, what is the invoice price?
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