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Soundsonic Inc.'s perpetual preferred stock sells for $39.45 per share and it pay $7.50 in annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? A.5.00% B.7.62% C.8.03% D.8.45% E.8.88% Q2.Calph Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. you have been provided with the following date rRF=3.25%; RPm=6.45%;and b=1.27.Based on the CAPM approach, what is the cost of common equity from retained earnings? A.8.19% B.9.70% C.10.58% D.11.44% E.13.24% Q3 Assume that you are a consultant to Tintle Inc, and you have been provided with the following date,D1=$0.81;P0=$23.43;and g =4.00%(constant).what is the cost of common equity from retained earning based on the DCF approach? A.3.46% B.4.00% C.4.81% D.4.97% E.7.46%
Sunny Co. is a manufacturing firm. Sunny Co.'s current value of operations, including debt and equity, is estimated to be $20 million. Sunny Co. has $8 million face-value zero coupon debt that is due in three years. The risk-free rate is 6%, and the ..
The Marietta Corporation, a large manufacturer of mufflers, tailpipes, and shock absorbers, is currently carrying out its financial planning for next year. In about two weeks, at the next meeting of the firm’s board of directors, Frank Bosworth, vice..
Moogle, Inc. is in the same business as Google, Inc., but has recently retired all its debt to become an all-equity firm. Its return on equity has dropped from 12.25% to 10.60% as a result of this
Pinches Salt Company has the following income statement for 2010: Compute Pinches's DOL, DFL, and DCL. If sales increase to $5,500,000, what is your forecast of EPS?
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $538,000. This cost will be depreciated straight-line to zero over the project’s four-year life, at the end of which the sausage system can be scrapped for $114,000. The sa..
Assume you can buy 52 British pounds with 100 Canadian dollars. How much profit can you earn on a triangle arbitrage given the following rates if you start out with 100 U.S. dollars?
A basic interest rate swap is priced as a zero net present value transaction. Explain what this means. Use the two year swap data to demonstrate your argument.
Choosing One Portfolio. The following table shows your predictions of the future returns on three mutual funds. Treasury Bills currently earn 4%. To invest all your wealth, you are limited to choosing a portfolio of only one of these three funds alon..
What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?
Lloyd and Harry Limo Service, Co. is currently operating at 92% of fixed asset capacity. Fixed assets on the balance sheet are $593,000. Current sales are $640,000, and are projected to grow to $792,000. How many in new fixed assets are required to s..
You borrow $11M by issuing a par-value bond that has a 10-year maturity, promises an annual coupon payment of 5 percent, and has a face value of $10M. The expected return on this bond is also 5 percent. What is the value of this bond, as determined b..
Calculate and interpret the ratios - Industry Average Return on assets (ROA) 5.2% Current ratio 2.0 Days cash on hand 22 daysAverage collection
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