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Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.8, 1.2, 1.4, and 1.6, respectively. Assume all current and future projects will be financed with 25 percent debt and 75 percent equity, the current cost of equity (based on an average firm beta of 1.1 and a current risk-free rate of 5 percent) is 12 percent and the after-tax yield on the company's bonds is 10 percent.
What will the WACCs be for each division?
Video Toys manufacturers and sells arcade games. Dividends are currently $1.50 per share and are expected to grow at a 15% compound annual rate over the next three years.
If the future value of an ordinary, 11 year annuity is $5,575 and interest rates are 5.5%, what is the future value of the same annuity due
Suppose you purchased one of these bonds at par value when it was issued. Right away, market interest rates jumped, and the YTM on your bond rose to 6%. What happened to the price of your bond
The Pettit Corporation has annual credit sales of $2 million. Current expenses for the collection department are $30,000, bad debt losses are 2% and the days sales outstanding is 30 days.
All revenues were collected in cash, and all expenses, excluding depreciation, were paid in cash and all expenses exlduing depreciation were paid in cahs during the year.
Your company has 14 million shares of common stock outstanding. The common stock currently sells for $34 per share and has a beta of 1.2. The market risk premium is 10.5 percent and T-bills are yielding 2.0 percent.
Three years ago, Adrian purchased 250 shares of stock in X Corp. for $22,500. On December 30 of year 4, Adrian sells the 250 shares for $18,750.
Gross revenue last year were $9.9 million, and total costs were $5.0 million. Blaine Company has 1.6 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 6 percent per year.
A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -2%. Its recent divided was $2.00. What is the value of this stock when the required return is 9%
What's the present value of a $1,000 bond that matures in 2 years and pays coupons at the rate of 2% per eyar> ( one coupon every 6 months) Assume that the risk free interest rate is 3% throughout the 3 year period.
John agrees to invest in a savings plan that requires deposits of $1000 at the start of each year for 6 years. According to the terms of the savings plan, the force of interest at time t is 0.03 + 0.005t^2
A six-month $10,000 Treasury bill is selling for $9,844. What is the annual yield according to the discount method. Does this yield understate or overstate the true annual yield
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