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You are given the following information for Watson Power Co. Assume the company’s tax rate is 35 percent. Debt: 6,000 6.7 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. Common stock: 390,000 shares outstanding, selling for $57 per share; the beta is 1.13. Preferred stock: 17,000 shares of 4 percent preferred stock outstanding, currently selling for $77 per share. Market: 6 percent market risk premium and 4.7 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Suppose a project will increase revenues by $300,000 a year. Cost of goods sold averages 40% of revenues. Other overhead operating costs will increase by $12,000 due to the project. Depreciation for the new project will be $30,000 annually. The firm ..
Solitaire Machinery is a Swiss multinational manufacturing company. Currently, Solitaire's financial planners are considering undertaking a 1-year project in the United States. what is the net present value and rate of return of the project for Solit..
Mickelson Corporation will pay a dividend of $2.74 per share next year. The company pledges to increase its dividend by 6 percent per year indefinitely. If you require a return of 12 percent on your investment, how much will you pay for the company’s..
You learn that the bank has $300 million in capital and $5 billion in assets. Would you become an investor in this bank? Briefly explain.
Andres Michael bought a new boat. He took out a loan for $24,420 at 2.75% interest for 4 years. He made a $4,850 partial payment at 4 months and another partial payment of $2,810 at 9 months. How much is due at maturity?
Midland Oil has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. C..
A loan is to be paid off in twenty annual instalments of $100, with the first payment due one year after the loan is made. What is the total amount of principal paid in the even numbered instalments, if the effective rate of interest is 4%?
Apix is considering coffee packaging as an additional diversification to its product line. Here’s information regarding the coffee packaging project: Was there further financial information that you required that was not provided to you? What financi..
Why do the soft technologies open more opportunities for women? To what extent have these technologies impacted the perceptions of men’s and women’s roles in the economy, within marriage, and in society as a whole?
Unida Systems has 38 million shares outstanding trading for $10 per share. In addition, Unida has $114 million in outstanding debt. Suppose Unida's equity cost of capital is 18%, its debt cost of capital is 9 %, and the corporate tax rate is 34%. Wha..
We are evaluating a project that costs $1,180,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 66,000 units per year. Calculate the best-case an..
You need to choose between two companies to invest in for an assignment based on their financial statements.
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