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Organic Produce Corporation has 8.9 million shares of common stock outstanding, 640,000 shares of 7.4 percent preferred stock outstanding, and 189,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.40 per share and has a beta of 1.34, the preferred stock currently sells for $106.60 per share, and the bonds have 13 years to maturity and sell for 89 percent of par. The market risk premium is 7 percent, T-bills are yielding 5.7 percent, and the firm's tax rate is 35 percent.Required:
(a) What is the firm's market value capital structure? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Market value weight of debt Market value weight of preferred stock Market value weight of equity
(b) If the firm is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows?
Objective type questions on payback period, NPV and IRR and what is the internal rate of return on this project
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Key's Corporation's five year bonds yield 6.50% and five year T-bonds yield 4.40%. The real risk free rate is 2.5%, the default risk premium for Key's bond is DRP is 0.40%,
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You're employed by CPA firm that has international client, Global Manufacturing, with home offices in country in the European Union. The company recently entered in a lucrative sales contract with company in South Africa.
Suppose you purchase a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years.
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