User Account

All Pages

What would be the new equity cost of capital

Assignment Help Financial Accounting
Reference no: EM132764867

Question - The market value of Rumbers Inc is currently 77.0% in equity and 23.0% in debt. Its current WACC is 15.0%, marginal corporate tax rate is 36.0%, the yield to maturity on its outstanding bonds is 8.2% and is expected to remain constant, the risk-free rate is 3.0%, and the expected return on the market portfolio is 9.5%. Rumbers is strategically positioning itself for an acquisition and has the capacity to increase its level of debt to equity ratio to 50.0% over 50.0% if needed. If the firm changed its capital structure as proposed, what would be the new equity cost of capital?

Reference no: EM132764867

Questions Cloud

Determine the present value of expected future cash inflows : Ram Electric Company is being considered for acquisition by Cavalier Electric. Determine the present value of the expected future cash inflows
Consumer protection is important issue : Consumer protection is an important issue, but how much responsibility should the government have in protecting the consumer?
Calculate the share price of Poll Bhd : The company stock returns have a correlation of 0.35 with the market portfolio returns, and have a standard deviation of 30%. Calculate share price of Poll Bhd
Alleging violation of section 1983 : A case is brought against Officer Harris alleging a violation of Section 1983 (federal law) and a violation of Kansas state tort law.
What would be the new equity cost of capital : The market value of Rumbers Inc is currently 77.0% in equity and 23.0% in debt. What would be the new equity cost of capital
About possibility of terrorists entering us : Since 9/11 there has been continuing concern about the possibility of terrorists entering the U.S. through the porous Southern border.
Calculate the price of a share in Mitsui Ltd : Mitsui Ltd has 1 million issued shares and expects unlevered after-tax cash flows of $300,000 every year, forever. Calculate the price of a share in Mitsui Ltd
Calculate the present value of all future tax shields : ABC Corp is expected to have free cash flows of $116 million at the end of the year. Calculate the present value of all future tax shields
Estimate the duration of phase of the cell cycle : Use percentages to estimate the duration of each phase of the cell cycle. Show your work.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd