What proportion of a firm is debt financed

Assignment Help Financial Management
Reference no: EM13729823

What proportion of a firm is debt financed if the WACC is 12%, the return on debt is 6%, the tax rate is 40% and the required return on equity is 18%?

Reference no: EM13729823

Questions Cloud

One participant must be referred to ongoing services : One participant must be referred to ongoing services. Describe how you, as the counselor, will handle this referral for continued services. Will you continue with individual services, refer to another therapist, or refer to another group?
Stock price today based on the dividend discount model : Yamaha just had earnings per share of $2 at the end of last year and paid out an dividend of $0.3 per share. Analysts are predicting a 8% per year growth rate in earnings over the next three years followed by a growth rate of 6% for two years. After ..
What is the stock price at the start of year : Logitech stock is currently selling for $30 per share. The next expected annual dividend is $3 at the end of this year and the dividend growth rate is 6% per year. What is the stock price at the start of year 4 (end of yr 3)?
Much has been written on the self-perceived : Much has been written on the self-perceived ability of individuals to change the nature of their lives (Rotter, 1990; Judge & Bono, 2001). While many psychologists interpret ideas such as "locus of control" and "self-efficacy" as individually variabl..
What proportion of a firm is debt financed : What proportion of a firm is debt financed if the WACC is 12%, the return on debt is 6%, the tax rate is 40% and the required return on equity is 18%?
A zero coupon bond with a face value : A zero coupon bond with a face value of $1000 is issued with an initial price $507.96. the bond matures in 18 years. what is the implicit interest in dollars for the first year of the bond's life . use semi-annual compounding.
What will be firms quick ratio after nelson has raised : The Nelson Company has 1,740,000 in current assets and 600,000 in current liabilities. Its initial inventory level 420,000 and it will raise funds as additional notes payable and use them to increase inventory. What will be the firm's quick ratio aft..
Here is another example of the ramifications of slavery : Here is another example of the ramifications of slavery that is often not known by many people. The following brief video clip discusses the controversy around descendants of former Cherokee Nation slaves who are fighting to remain a part of the trib..
Bond provisions will make bond more desirable to investors : Which of the following bond provisions will make a bond more desirable to investors, other things being equal?

Reviews

Write a Review

 

Financial Management Questions & Answers

  Impact short-run inflation and output byaltering

Given a firms liabilities an increase in interest rates reduces thefirm's net worth because - difficult to keep inflation and output fromfluctuating when aggregate expenditures change because

  What is the unlevered return on equity of the new project

Company A has a debt of $25,000,000 while its equity is $115,000,000. The beta of A's levered equity is 0.95 and the company keeps a constant debt-to- equity ratio. Company A's cost of debt is 4.35% and it bears no systematic risk. The expected retur..

  Calculate the manufacturers percent mark up on cost

Within a given distribution channel, the following information is available concerning trade margins and costs. A wholesaler has a unit selling price of $875 and a unit cost of $493. The retailer requires a 50% mark up on selling price. The manufactu..

  Adjustable mortgage loan tied to the one-year treasury rate

Assume the following for a fully amortizing adjustable mortgage loan tied to the one-year Treasury rate, with 1 year adjustment intervals: Loan amount: 150,000; annual rate cap: 2%; life-of-loan-cap: 5%;

  Investment opportunity-What is the NPV of the project

Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected to produce cash flows of €1.8 million in Year 1, €2.6 million in Year 2, and €3.5 million in Year 3. The current spot exchange rate is $1.36/€..

  Bond valuation-interest payment

An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 9% annual coupon. Bond L matures in 18 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturit..

  Evaluate the principal

What is the principal for first year

  Assumes that inflation rate is running

You deposit a sum of $10,000 today in your bank safe deposit box and leave it there. You learn nothing in your bank account as the money is sitting inside the safe deposit box. Assumes that inflation rate is running at 14% a year. How much will your ..

  Investors funds should be invested in the risky portfolio

An investor wants to form a two asset portfolio consisting of Treasury bills with a return of 2.5% and a risky portfolio with an expected return of 15.2% and a standard deviation of 16%. The investor wants the expected return of the two asset portfol..

  Wide cost of capital for analyzing capital expenditures

ExxonMobil ( XOM) is one of the half- dozen major oil companies in the world. The firm has four primary operating divisions (upstream, downstream, chemical, and global services) as well as a number of operating companies that it has acquired over the..

  What were flotation costs as a fraction of funds raised

Moonscape has just completed an initial public offering. The firm sold 2 million shares at an offer price of $8 per share. The underwriting spread was $.6 a share. The price of the stock closed at $12 per share at the end of the first day of trading...

  The warrant over and above its exercise value

Company Z issued bonds with detachable warrants several years ago. Each warrant allows the holder to purchase one share of stock at $30 per share. The stock has a beta of 1.3. How much would an investor likely be willing to pay for the warrant over a..

Free Assignment Quote

Assured A++ Grade

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