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Hankins Corporation has 9 million shares of common stock outstanding, 650,000 shares of 7 percent preferred stock outstanding, and 190,000 of 8.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.50 per share and has a beta of 1.35, the preferred stock currently sells for $106.50 per share, and the bonds have 15 years to maturity and sell for 88.5 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 5.5 percent, and the firm’s tax rate is 34 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Market value weight of debt Market value weight of preferred stock Market value weight of equity b. If the firm is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Weighted average cost of capital %
Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. What is the company’s WACC?
Calculating Returns. Suppose a stock had an initial price of $78 per share, paid a dividend of $1.25 per share during the year, and had an ending share price of $87. Compute the percentage total return. What was the dividend yield? The capital gains ..
Assume a project has the following expected cash flows: What is the project’s payback (payback period)?
Prepare financial ratios for Rolls Royce plc and Costainplc for 2010 &2011 which will enable the financial position and performance of the companies in 2011 to be measured. Ratios required Gearing: Gearing and Liquidity: Current, Acid Test
Assume that Community Health Systems (CHS) is evaluating the feasibility of building a new hospital in an area not currently served by the company. The company's analysts estimate a market beta for the hospital project of 1.1, which is somewhat highe..
Carry- all plans to sell 1300 carriers next year and has budgeted sales of $46,000 and profits of $22,000. variable cost are projected to be $20 per unit. micheal company offers to pay $20,800 to buy 600 units from carry-all. total fixed cost are 700..
A firm has a project that costs $600 today and pays off next period $900 with probability .5 and $360 with probability .5. Assume that all investors are risk-neutral, the risk-free interest rate is 0, and there are no direct bankruptcy costs.
What is the required rate of return (yield) on the preferred stock?
First determine the tax issue. Then research the issue and determine your conclusion. Finally, write up your results using the following format: Deducting Charitable Contributions. Your clients, Sonny and his wife Honey, believe in worshiping Ta-Ra,..
A put option is currently selling for $5.70. It has a strike price of $50 and seven months to maturity. The current stock price is $57. The risk-free rate is 4.6 percent, and the stock will pay a $2.70 dividend in two months. What is the price of a c..
When reviewing the financial statements of a company, there are many different ratios to choose from. Choose a ratio that looks at liquidity, solvency and profitability and discuss its importance.
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.88 million.
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