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Verizon Corporation has 55% equity and 45% debt (market values) in its capital structure. The pretax cost of debt is 7%, and that of equity 12%. The total value of the company is $75 billion and its income tax rate is 35%. Verizon has to raise $4 billion in new capital, which will make the EBIT of the company to be $4 billion, with a standard deviation of $2 billion. The company has decided to raise the new capital half with debt and half with equity at the existing rates. Calculate Verizon's new WACC, and the probability that its interest coverage ratio will be less than one.
Answer: 8.629%, 22.70%
Funding the investment by an issue of ordinary shares could tender several advantages to Springbank plc. Gearing would drop to 47% (3·5/7·4) fewer than half of the sector average o
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in the absence of no agreement in partnership discuss and explain the provision of partnership act
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Star Corporation issued both common and preferred stock during 19X6. The stockholders' equity sections of the company's balance sheets at the end of 19X6 and 19X5 follow.
mportance of recognition revenue..
Suppose that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 8%. Your company is about as risky as the avera
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