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LEVERAGE -
1. What legal aspect of corporate debt explains the fact that increasing your company's leverage (using more debt and less equity to finance your operations) will make your company's stock beta rise? (PLEASE INCLUDE FORMULAS USED TO SOLVE PROBLEM FOR EXCEL).
WEIGHTED AVERAGE COST OF CAPITAL -
2. Company Y is financed one third with debt and two thirds with equity. Company Y's expected return on equity is 12 percent and its expected return on debt is 6 percent. Company Y has a corporate tax rate of 33 percent. Calcualte Company Y's Weighted Average Cost of Capital (CACC)? (PLEASE INCLUDE FORMULAS USED TO SOLVE PROBLEM FOR EXCEL).
Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, re..
The company's cost of capital is 20 percent. What is the internal rate of return on this project?
Find the implied growth rate applied by Lenovo assuming that the analyst’s estimates for the required rate of rate are correct.
Stock A has a beta of 0.9, Stock B has a beta of 1.05 and Stock C has a beta of 1.25. What is the resulting portfolio beta?
Gold mining, inc uses the profitability index when evaluating projects. gold mining's cost of capital is 12.57 percent. what is the PI of a project if the initial costs are $1952278 and the project life is estimated as 9 years? the project will produ..
Assume A prefers fixed rate and B prefers floating rate. Show how these two firms can both obtain cheaper financing using a swap.
Assume that the liquidity premium on the corporate bond is 0.3%. What is the default risk premium on the corporate bond?
Explain the difference between hedge funds and futures funds? What are the objectives of federal regulation of future markets?
Show the step-by-step process and how to do calculations of the Boom and what the expected return on stock is. - Calculate the expected return on stock of Acme Inc.
Thompson Manufacturing is considering two investment proposals. The first involves a quality improvement project, and the second is about an advertising campaign. Suppose the hurdle rate of the firm is 10%. Calculate the cash flows of the “incrementa..
The National Bank of Wynona offers two types of savings account. which account would pay the most interest (and how much more)?
Prospect Corporation is a venture capital company. Convert the bond at the end of second year.
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