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Tundra Corporation is interested in acquiring Tantrell Corporation. Tantrell has 2 million shares outstanding and a target capital structure consisting of 40 percent debt. The debt interest rate is 8 percent. Assume that the risk-free rate of interest is 3 percent and the market risk premium is 7 percent. Tantrell's free cash flow (FCF0) is $3 million per year and is expected to grow at a constant rate of 6 percent a year; its beta is 1.2. Tantrell has $5 million in debt. The tax rate for both companies is 30 percent.
a. Calculate the required rate of return on equity using equation: rs = rRF + RPM(b)
b. Calculate weighted average cost of capital, using equation: WACC = Wdrd(1-%) + wsrs
c. Calculate the value of operations, using equation: Vops = FCF0 (1+g)/WACC - g)
d. Calculate the value of the company's equity, using equation: Vs = Vops - debt
e. Calculate the current value of the company's stock, using equation:
Price per share = Vs/shares outstanding
Using the tables below, calculate the maintenance cost assigned to the pharmacy using the existing method and using an ABC approach.
Describe the parts of an e-commerce endorsement
You have $40,000 to invest on Sophie Shoes, a stock selling for $80 a share. The intial margin requirement is 60%. Ignoring taxes & commissions,
Question 1: Where do ethical preferences originate? Question 2: Kant's deontological theory posits that moral behavior requires holding to certain principles without exception, he outlines this principle by means of developing:
To answer the question, Determine the earnings after taxed and compute the percentage increase in these earnings from the answers you derived in part b.
By 1990, that figure had risen to $123,000. What was the average annual rate of change in the price of houses over this time period? Select one: a. 5.95% per year b. 3.42% per year c. 10.12% per year d. 12.36% per year.
What are the three principal forms of business organization? What are the advantages and disadvantages of each?
1. Gorton argues that regulating capital ratios cannot prevent a systemic run on banks. true or false ? why ? 2. Over time banks have become more efficient at using bank capital and thus use less of it relative to the assets they fund. The capital r..
Read and complete case study, "Eat at My Restaurant" in your text. Address the following elements, which are also "required" elements at the end of the case study:
interest centers around the life of an electronic component. suppose it is known that the probability that the
the company president is reviewing the peformance and budget of the marketing department with the vice president of
a. What will be the number of shares that you hold after the stock dividend is paid? b. What will be the total value of your equity position after the stock dividend is paid?
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