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Suppose? Alcatel-Lucent has an equity cost of capital of 10.4 % ?, market capitalization of $ 10.22 ?billion, and an enterprise value of $ 14.0 billion with a debt cost of capital of 5.9 % and its marginal tax rate is 34 % . a. What is? Alcatel-Lucent's WACC? b. If? Alcatel-Lucent maintains a constant? debt-equity ratio, what is the value of a project with average risk and the following expected free cash? flows? Year 0 1 2 3 FCF ?($ million) negative 100 45 105 75 c. If? Alcatel-Lucent maintains its? debt-equity ratio, what is the debt capacity of the project in part ?(b?)?
Some time ago, Vanessa purchased eleven acres of land costing $58,500. Today, that land is valued at $253,167. How long has she owned this land if the price of the land has been increasing at 9% per year? On your ninth birthday, you received $500 whi..
In the previous problem, suppose you sell the stock at a price of $62. What is your return? What would your return have been had you purchased the stock without margin? What if the stock price is $46 when you sell the stock? You purchase 275 shares o..
The Oceanic Corporation, a Chesapeake, VA based company, was established in 1994. Glenn Rodgers III founded the corporation, which was privately owned at the time, after his retirement from Norentech Corporation. Comment on Stephanie’s assumptions as..
Fyre, Inc., has sales of $625,000, costs of $260,000, depreciation expense of $79,000, interest expense of $43,000, and a tax rate of 35 percent. What is the net income for this firm? Suppose the firm had 40,000 shares of common stock outstanding. Wh..
The Know-It-All Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next 4 years and then decreasing the growth rate to 5% per year. The company just paid its annual dividen..
A firm has a market value equal to its book value. Currently, the firm has excess cash of $700 and other assets of $6,300. Equity is worth $7,000. The firm has 400 shares of stock outstanding and net income of $684. What will the new earnings per sha..
When is a cash flow budget a useful alternative to a comprehensive budget? How can you determine if a lump-sum payment or an annuity will have greater value for you?
Why would an analyst use the Modified Du Pont system to calculate ROE when ROE may be calculated more simply? Explain
Sarah Mix is a single, 30-year-old business owner who has $500 a month to invest. This money is in excess of the contribution to her company pension plan. Sarah hears that many of her friends are investing in mutual funds. What would you advise Sarah..
The risk-free rate is 11% and the expected return on the market is 14%. Upton Company’s stock has a beta coefficient of 1.5. If Upton's next dividend is $1.8 and the dividends are expected to grow at a constant 5% a year, what would be the current pr..
Assume that the City of Pensacola has $10 million of 12 percent, 20-year, $1,000 par value, semiannual payment bonds outstanding that can be called at a price of $1,100 per bond. New 20-year, 10 percent semiannual payment bonds can be sold at a flota..
Suppose rRF = 9%, rM = 14%, and bi =1.3. what is the ri, the required rate of return on stock i? Now suppose that rRF (1) increases to 10% and (2) decreases to 8%. The slope of SML remains constant. How would this affect rM and rI?
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