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The High Country Water Company (HCWC) has a capital structure of 72% risky debt with a CAPM beta of 0.75 and 28% equity with a CAPM beta of 1.75. The current market value of HCWC is $6700 million, the riskless interest rate is 3% and the market risk premium is 8%. Assume that the corporate tax effects of debt alone approximate the overall tax and non-tax effects. The corporate tax rate is 34%. Given the current riskless and rate and market risk premium, calculate what the appropriate risk-adjused discount rate on HCWC equity would be if HCWC had zero debt. HCWC now announces that it is proposing to undertake a new scale-enhancing investment. In part to reduce its debt level, it will finance the new project entirely with a new equity issue. Ignore flotation costs. The up-front cost of the investment is $680 million. Starting one year hence, the project is expected to return an annual pre-tax cash flow of $250 million for 5 years at which time the project ends. Assume that the project has no liquidation value and no effect on HCWC net working capital requirements. HCWC will be able depreciate the initial investment on a straight-line basis over 5 years. It uses the riskless interest rate to discount the depreciation tax shield.
it takes two hours to refill the container also return it to the bathtub. Illustrate what happens to the system over time.
Is it possible to get a profit of $800,000 or more as i looking for the maximum profit at least? An Integrated Production Planning and Control Case
The immediacy of technological communications has definitely changed the marketing landscape in many ways. Another thing to consider is that the Internet certainly gives way for more third-party vendors to enter the picture. We appreciate your contri..
Devise a plan for sending a team of astronauts to Mars. Of course, you are free to use one of the common options: Earth to Mars, Earth to Space Station to Mars, or Earth to Moon to Mars. Your comments should be one or two paragraphs each. You can foc..
Explain how does consumer behaviour influence development of marketing mix. Explain how does consumer behaviour influence development of product features itself.
how many Kanban card sets should be authorized? What is the maximum authorized inventory?
PepsiCo faces fierce but different competitors in its snacks versus beverages segment as described in the Cohesion Case. The external opportunities and threats that PepsiCo faces are different in each segment, so each division prepares its own list o..
What would the cost to place an order need to be if Davis implemented a just-in-time approach so ordering 1 unit at a time is the optimal ordering quantity? Use the original variables for part number 64-1909.
Three weeks before Chase paid any of the forged checks, the attorney's gave Chase a copy of the death certificate and a court order to examine his deposit box. Of the parties mentioned, is anyone liable?
State how production standards place managements and unions at odds against each other. Why do some unions prefer the right to strike in this matter while others prefer arbitration?
Identify three principles of leadership from this chapter that you think would be most important to include in the training for supervisors in a customer care company.
Discuss how the availability of newer tools might have affected the choices and priorities on which Alex focused.
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