Which of the following events would reduce its wacc

Reference no: EM13263806

Schalheim Sisters Inc. has always paid out all of its earnings as dividends; hence, the firm has no retained earnings. This same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would REDUCE its WACC?

The market risk premium declines.
The flotation costs associated with issuing new common stock increase.
The company's beta increases.
Expected inflation increases.
The flotation costs associated with issuing preferred stock increase.

Reference no: EM13263806

Questions Cloud

What does the p-value in your spss output tell you : Produce the scatter plot for x3 and y3. Do you think there are any outliers?Calculate the correlation coefficient (r) for all the data points What does the p-value in your SPSS output tell you?

What is the torsion constant of the hairspring : A certain alarm clock ticks four times each second, with each tick representing half a period. What is the torsion constant of the hairspring

Which stock should this investor add to his or her portfolio : However, Stock A's standard deviation of returns is 12% versus 8% for Stock B. Which stock should this investor add to his or her portfolio, or does the choice not matter?

Which of the following is most likely to occur : Assume that the risk-free rate remains constant, but the market risk premium declines. Which of the following is most likely to occur?

Which of the following events would reduce its wacc : The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would REDUCE its WACC?

Compute the electron current in the filament : The current in a 100 watt lightbulb is 0.770A . The filament inside the bulb is 0.300mm in diameter. What is the electron current in the filament

Are cell phones good or bad for the environment : Write an essay on "are cell phones good or bad for the environment? And why?"

How much would it cost him to buy the annuity today : Your father is about to retire, and he wants to buy an annuity that will provide him with $85,000 of income a year for 25 years, with the first payment coming immediately. The discount rate on such annuities is 5.15%. How much would it cost him to..

What will the interest tax deduction be for 2009 : On January 1, 2009, your brother's business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest ta..

User Account

All Pages