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LongLegs, Inc. is an all-equity firm whose current business involves manufacturing and selling designer jeans. The company is blessed in that it operates in capital markets that are perfect, that is, there are no taxes or bankruptcy costs. The current weighted average cost of capital (WACC) of LongLegs, Inc. is 11.50%, and its equity beta is 2.00. LongLegs, Inc. is considering penetrating the wind energy business. The wind project requires a $10,000,000 investment at t = 0 and will yield $500,000 a year for the foreseeable future, starting a year from today (at t = 1). The manager of the new wind project realizes that he is only responsible for the production of electricity and that virtually all the risk is idiosyncratic; after all, wind just blows whenever it wants to. The risk free rate is 2.50%, the market risk premium (the average difference between the return on the market and the risk-free rate) is 4.50%, and the wind project will be financed with equity. What is the NPV of this project?
As the Marketing Manager for the Zig brand of microwave ovens in a large customer products company you must answer questions found below with following financial data regarding product.
what managerial assessments may you make about an organization that has a profit and negative cash flow in the same
Why would it be challenging to properly compare the performance of an equity fund to a fixed-income market?
Your corporation has a marginal tax rate of 35% and has purchased preferred stock in another company. The before-tax dividend yield on the preferred stock is 12%. What is the company's after-tax return on the preferred, assuming a 70% dividend exc..
1. explain the rational for each of the four variables that make up a firms credit policy. how likely and how quickly
at a time when demand for ready-to-eat cereal was stagnant a spokesperson for the cereal maker kelloggs was quoted as
The next dividend payment from a firm will be $1.12 per share. The dividends are anticipated to maintain a 5% growth rate for ever. If the firm shares currently sell for $35.00, what is the required return?
Tthe current price of a stock is S=20. It is known that at the end of 6 months the stock will be either Su= 24 or Sd=18.1.Compute the risk neutral price of the call option with the strike price E= 21 and r = 5%.
some traders use hedging as a means of generating financial income. explain how businesses might use hedging to
project s costs 15000 and its expected cash flows would be 4500per year for 5 years. mutually exclusive project l
Case study questions: What would Exacta's true exposure be from its new U.S. operations, and how would it change from the company's current exposure?
Imagine that you are a financial manager researching investments for your client that align with its investment goals. Use the Internet or the Strayer Library to research any U.S. publicly traded company that you may consider as an investment o..
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