Already have an account? Get multiple benefits of using own account!
Login in your account..!
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
First Inc. currently has 25,000 shares outstanding, selling at $80 per share. Its 8% perpetual debts have a par value of $800,000 and are trading at 125. The EBIT is expected to be $540,000 forever. The company is considering a new issue of perpetual debts of $1,000,000 to buy back its stocks. The new debts will have the same yield as the existing debts. The tax rate is of 30%.
a. What is the debt equity ratio before the new debt issue?b. What is the cost of equity before the new debt issue if First is all equity financed?c. What is the WACC before the new debt issue?d. What is the debt equity ratio after the new debt issue?e. What is stock price after the new debt issue?f. What is the WACC after the new debt issue?g. Determine the breakeven EBIT between the existing and the proposed capital structures.
Ujuzi Limited wishes to raise finance to cater for the purchase of new fixed assets, as its sales level has greatly increased in the recent years, and the demand for its pro
Based on your answer in (a), convert the projected franc flows into dollar flows and calculate the NPV. c. What is the required return on franc flows? Based on your answer,
Suppose you have an investment opportunity in Japan. It requires an investment of $1 million today and will produce a cash flow of Y114 in one year with no risk. Assume risk f
The firm's new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks' average. If this were done, by how much would inventories
Why do you suppose that foreign governments provide MNCs with incentives to undertake FDI in their countries?- Explain the theory of comparative advantage as a motive for fore
What is the effective, compound rate of interest you earn if you enter into a repurchase agreement in which you buy a Treasury bill that costs $98760 and will be redeemed fo
The experiences of fixed exchange-rate systems and target zone arrangements haven't been entirely satisfactory. What lessons can economists draw from the breakdown of the Bret
Four months ago, you purchased 1,200 shares of Lakeside Bank stock for $21.20 a share. You have received dividend payments equal to $.56 a share. Today, you sold all of your s
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd