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Protekter and Gambler (PKGR) currently has debt equity ratio of approximately 0.22. The current beta of its stock is 0.55. The expectation of the market premium is 9.5%. PKGR can borrow at 4.5%, just 20 basis points over the risk free rate of 4.3%
1) What is the weighted average cost of capital with the current capital structure?
2) If PKGR wants to increase its debt-to-equity ratio to 0.55 through a leveraged recap, what is the beta of PKGR after this transaction?
3) What is the weighted average cost of capital after transaction?
Research any two manufacturing scheduling systems. Identify the strengths and weaknesses of each (including cost, visability across the supply chain, and ease of implementation). Prepare a brief presentation (approx. 5 minutes) using PowerPoint.
Calculate the expected earnings per share (EPS), the standard deviation of EPS, and the coefficient of variation of EPS for the three proposed capital structures.
What is the expected change in net working capital? What is the total terminal cash flow? When will it occur?
company’s annual capital budget meeting to present an analysis of the strengths and weaknesses of the following capital budgeting selection methodologies:
The firm has estimated the after tax cost of each source of funds. Debt costs .07, preferred stock .11, retained earnings .20 and new common stock .22. The firm is operating under conditions of capital rationing and therefore will not sell new stock ..
A speculator is considering the purchase of five three-month Japanese yen call options with a strike price of 96 cents per 100 yen. The premium is 1.35 cents per 100 yen. The spot price is 95.28 cents per 100 yen and the 90-day forward rate is 95.71 ..
Summerdahl Resorts' common stock is currently trading at $22.00 per share. The stock is expected to pay a dividend of $2.50 a share at the end of the year (D1 = $2.50), and the dividend is expected to grow at a constant rate of 3% a year. What is the..
XYZ corp. currently has 50 million shares of common stock outstanding. Their current market price is $80 per share and have a beta of 1.15. XYZ has $1 billion of bonds outstanding, each with the market value of $1100. It is known that the yield to ma..
Suppose firm XYZ has AR (Accounts Receivable) = 500, Sales = 3000, Inventory = 300, Cost of Goods Sold = 1200, and AP (Accounts Payable) = 100. How much cash does firm XYZ save if it reduces its Days Sales Outstanding by 10 days? What are specific ac..
What is the required rate of return on each of the two companies’ equity?
Assume that U.S. Treasury decides to extend a loan guarantee (for political reasons) to a country with a B rating. With such a guarantee this country will be able to issue a five-year $2 billion face value zero-coupon bond at a yield of 7.5 percent (..
What are the promised coupon payments to each of the classes during the first quarter? What is the total interest payment due? If the trustee received a payment of $4,834,796, how would the payment be applied? Assume that for the first year the trust..
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