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A firm has 500,000 shares of stock outstanding with a par value of $1 per share and debt outstanding with a par value of $1,000,000. The stock is selling for $10 per share, and the debt is selling at a discount (90% of par). If the firm were financed with all equity, the cost capital would be 12%; the yield to maturity on the firm's debt is 8%. The corporate tax rate is 34%. Calculate the required return on equity for this firm.
A trader buys 200 shares of a stock on margin. The price of the stock is $20. The initial margin is 60% and the maintenance margin is 30%. How much money does the trader have to provide initially? For what share price is there a margin call?
You are asked to estimate Blue Monster Corporation's after-tax cost of debt financing. It can issue 22 years to maturity bonds with a coupon rate of 11.97% paid annually, and par value of $1000. The bonds can be sold now at a price of $1184 each. Mar..
1.most of the worldrsquos population lives outside the united states. however many u.s. companies especially small
How and why does working capital affect the incremental cash flow estimation for a proposed large capital budgeting project? Explain
Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not roun..
Suppose a company will issue new 25-year debt with a par value of $1,000 and a coupon rate of 8%, paid annually. The tax rate is 40%. If the flotation cost is 3% of the issue proceeds, then what is the after-tax cost of debt? Disregard the tax shield..
If you find a deliverable bond with a: a 6% coupon rate, what will be the conversion factor?
question 1a- wildcat company stock is trading for 80 per share. the stock is expected to have a year end dividend of 4
A firm is expected to pay $2 dividend per share in year 1 (D1=$2) and the dividend is expected to grow at a constant rate of 5%. If the firm's stock price is $28.64 based on the constant growth model, what is the required rate of return on the stock?
For a company that is planning to issue bonds in the US to raise a few billion dollars, what would be a desirable trend in the value of the US dollar (i.e. a strengthening dollar, a weakening dollar, or a constant value dollar) and why?
A company purchases equipment for $5 million, incurs shipping costs of $30, 000 and installation costs of $50,000. It also requires additional net working capital of $100,000. What is the depreciable base?
Company A has sales of 4,481,550; income tax of 531,834; the selling, general, and admin expenses of 267,714; depreciation of 380,725; costs of goods sold of 2,496,660; and interest expense of 178,814. Calculate the amount of the firm's after-tax cas..
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