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1. Bruce & Co. expects its EBIT to be $149,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 34 percent. Bruce will borrow $61,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?
16.87 percent
18.57 percent
18.29 percent
18.86 percent
17.34 percent
2. Percy's Wholesale Supply has earnings before interest and taxes of $121,000. Both the book and the market value of debt is $190,000. The unlevered cost of equity is 14.7 percent while the pretax cost of debt is 8.6 percent. The tax rate is 35 percent. What is the firm's weighted average cost of capital?
12.65 percent
14.01 percent
13.07 percent
11.94 percent
14.37 percent
Shelton, Inc., has sales of $390,000, costs of $178,000, depreciation expense of $43,000, interest expense of $24,000, and a tax rate of 40 percent. What is the net income for the firm? What is the addition to retained earnings?
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.
Shamrock Corporation, having recently issued a $20,141,900, 15-year bond issue, is committed to make annual sinking fund deposits of $622,900.
Find Macaulay duration and modified duration.
Disposition effect is the tendency of individual investors to
Austin Power Company issued $1000 bonds that have an annual coupon rate of 9.5%. The present market value of the bond is $1250. If the bonds have 10 years remaining until maturity, what is the current yield on Austin's bonds?
Using the expectations hypothesis, compute the yield curve for the next three years.
what is the project’s average accounting return (AAR)?
The Bowman Corporation has a bond obligation of $16 million outstanding, which it is considering refunding. Though the bonds were initially issued at 13 percent, the interest rates on similar issues have declined to 11.8 percent. Calculate the presen..
CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $493,000 is estimated to result in $192,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Ta..
Assuming that actually occurs, what is the forecast change in the net operating working capital.
Imagine the life after university graduation (income): Write down the estimated amount of monthly income in different stages of your career from the time you start working until age 50.
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