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Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below.
Assets
Liabilities and Equity
The stock is currently selling for $15.00 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $1,150.00. The beta is 1.35, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 40%.
What is the best estimate of the after-tax cost of debt?
A firm with $49,000 in fixed costs breaks even on unit sales of 7,000, how many units must the firm sell to earn $30,000 in operating profit
Assume the $13,000 Treasury bill, 5.50% for 20 weeks. Calculate the effective rate of interest.
Investors generally can make one vote for each share of stock they hold. TIAA-CREF is the largest institutional shareholder in the United States; therefore it holds many shares and has more votes than any other organization.
Bobaflex Corporation has ending inventory of $684,273 and cost of goods sold for the year just ended was $4,358,722.What is the inventory turnover
Assume their marginal tax rate on ordinary income is 25 percent. The Nielsons incur $2,750 in miscellaneous itemized deductions, excluding investment expenses.
You buy a zero coupon bond at the beginning of the year that has a face value of $1000, a YTM of 9 percent, and 12 years to maturity. You hold the bond for the entire year.
Crypton Electronics has a capital structure consisting of 41% common stock and 59%debt. a debt issue of $1000 par value 6.1% bonds that mature in 15 years and pay intrest will sell for $977.
A couple wants to renovate their house in 3 years. They need $27,000 which they plan to save for in monthly payments in an account that pays 8.5% compounded monthly. How much would their monthly savings be
Tobin's BBQ has a bank loan at 8% interest and an after-tax cost of debt of 6%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%
Suppose that there is a 1% probability that operational risk losses of a certain type exceed $10 million. Use the power law to estimate the 99.97% worst-case operational risk loss when the parameter
A project has an initial cost of $27,400 and a market value of $32,600. What is the difference between these two values called
Bill makes annual deposits of $1900 to an an IRA earning 8% compounded annually for 20 years. At the end of the 20 years Bill retires. a) What was the value of his IRA at the end of 20 years
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