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Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity. The bonds are currently priced at $1003. The firm's marginal tax rate is 40%. The estimated risk premium between the company's stock and bond returns is 6%. The firm's expects to maintain a capital structure with 40% debt and 60% equity going forward. The company's W.A.C.C. is ____%. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process.
Suppose you buy a bond with a 12 percent annual coupon, payable semiannually. You actually pay $ 1,080 for this bond. On the day you buy it, the next coupon is due in 3 months. What would be the bond's clean price?
You are considering buying an investment that will be worth $55,000 when it matures in two years. If you want a rate of return of at least 15% compounding quarterly, what is the most you should be willing to pay for this investment?
The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $140 per share for months, and you believe it is going to stay in that range for the next 6 months. The price of a 6-month put option with an exercise price of $14..
A stock is expected to pay a dividend of $0.75 the end of the year (that is, D1 = $0.75), and it should continue to grow at a constant rate of 5% a year. If its required return is 12%, what is the stock's expected price 1 year from today?
The Copycat Firm wants to raise $10 million to expand its business. To accomplish this, it plans to sell 30-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 6%. What is the minimum number of bonds it must sell to raise the..
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15 percent a year for the next 4 years and then decreasing the growth rate to 5 percent per year. The company just paid its..
The Acme Chip Manufacturing Company (potato not computer) has a target capital structure of 40% debt and 60% common equity. They also have a 40% tax rate. you need this to calculate the "after-tax" cost of debt! They have three projects under conside..
Estimate the market value and weight of each component of the capital structure and estimate the book value and weight of each component in the capital structure.
Assume that the consolidated balance sheet for the commercial banking system can be simplified as follows: D+NW=R+L where D=deposits, NW= net worth, R=reserves and L=loans. what is the value of the money multiplier?how is the money multiplier related..
The risk-free rate of return is 6%, the required rate of return on the market is 10%, and High-Flyer stock has a beta coefficient of 2.5. If the dividend per share expected during the coming year, D1, is $2.20 and g = 5%, at what price should a share..
A stock has a beta of 1.28, the expected return on the market is 12 percent, and the risk-free rate is 4.5 percent. What must the expected return on this stock be?
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 20 percent, –12 percent, 17 percent, 20 percent, and 10 percent. a. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year pe..
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