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Tom and Jerry's has 2.1 million shares of common stock outstanding, 2.1 million shares of preferred stock outstanding, and 11.00 thousand bonds. If the common shares are selling for $13.10 per share, the preferred shares are selling for $10.10 per share, and the bonds are selling for 99.99 percent of par, what would be the weight used for equity in the computation of Tom and Jerry's WACC?
85.41% 49.87% 46.07% 33.33%
Your firm needs a computerized machine tool lathe which costs $53,000 and requires $12,300 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category...
1. gomez electronics needs to arrange financing for its expansion program. bank a offers to lend gomez the required
The market value of the marketing research firm Fax Facts is $900 million. The firm issues an additional $150 million of stock, but as a result the stock price falls by 2%. What is the cost of the price drop to existing shareholders as a fraction of ..
Calculate the required rate of return for Manning Enterprises assuming that investors expect a 3.2% rate of inflation in the future. The real risk-free rate is 1.25%, and the market risk premium is 3.5%. Manning has a beta of 1.7, and its realized ra..
The cost of debt is lower than the costs of stocks. Cost of Preferred stock is higher than the cost of common stocks.
Discuss the various issues that must be considered in selecting an investment banker for an IPO. Which type of placement is usually preferred by the issuing firm? Why?
Suppose you’re evaluating three alternatives MMMF in- vestments. The first fund buys a diversified portfolio of municipal securities from across the country and yields 3.2 percent. The second fund buys only taxable, short-term commercial paper and yi..
The current 3-month Treasury bill has an YTM of 3%. By carefully picking stocks and their weights in the portfolio, Connor managed to form a portfolio that gives him a guarantee return in 3 months. How much should this guarantee return be? Why?
Using a 4.4% discount rate, calculate the Net Present Value, Payback, Profitability Index and IRR for each of the investment projects below. Assuming a budget of $1,200,000 what are your recommendations for the three projects in the above problem? Ex..
Ramstucky Corp bonds just paid their annual coupon of 4%. They mature in 6 years. The required rate of return on the bonds is 5%. So it’s a $10,000 bond selling for $9,000. The call price of the bonds is 102, but they are not callable until after the..
Early in 2013, Maria bought shares of MBA Inc. at $27.85 per share. She received the following dividends per share (end of year). 2013 $1.50 2014 $2.00 2015 $2.50 Immediately after receiving the 2015 dividend, she sold the stock for $32.50 per share...
A business borrows $296,926 for 9 years at an annual rate of interest of 6%. If payments are annual and the loan will negatively amortize by $49,469, what will be the annual payment required? What is the present value of a perpetuity making quarterly..
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