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Market prices are $1,035 for bonds, $19. for preferred stock, and $35. for common stock. There will be sufficient internal common equity funding(i.e., retained earnings) available such that the firm does not plan to issue new common stock. Calculate the firms weighted average cost of capital.
Type of financing % of future financingbonds(8%,$1,000 par, 16 yr. maturity) 38%preferred stock(5,000 shares outstanding,$50 par, $1.50 dividend) 15%Common equity 47%Total 100%
Allen Air Lines is now in the terminal year of a project. The equipment originally cost $20 million, of which 80% has been depreciated. Carter can sell the used equipment today to another airline for $5 million, and its tax rate is 40%. What is th..
All net cash flows are received at year-end. What is the present value of the net cash flows from Phillip's operations?
What is the difference between a merger and consolidation? List and explain the motives of mergers and consolidations.
Explain how rulings by the courts and regulators have made the markets served by both commercial and investment banks more competitive.
The expansion plan can be financed with additional long-term debt at a 12% interest rate or the sale of new common stock at $8 per share. The firm's marginal tax rate is 40%. Determine the indifference level of EBIT for the two financing plans.
Company plans to finance $100,000 with internally generated funds but desires to secure the loan for remainder.
Explain Project acceptance or rejection Decision and reasons there of and Draw a cash flow diagram for this project
A Company sells two products, one call cogs and other called sprocket. The firm has a fixed cost of $100,000.00 per year. Each cog costs $8 to produce but can be sold in market for $18.
plot the approximate yield curve of a much riskier lower-rated company with a much higher risk of defaulting on its bonds.
Instead, assume that the restructuring is completed and Martin is now 20% debt and 80% common equity. But the after tax cost of debt is 9% and the cost of common equity is 13.5%. What is Martin's new weighted average cost of capital?
Analyse whether the proposed changes in credit policy should be accepted. Identify and discuss die key areas of accounts receivable management.
Explain decision making on the basis of the net present value criterion and profitability index of a project with a net investment of $20,000
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