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You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent. Debt: 10,000 7.1 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.04. Preferred stock: 21,000 shares of 5 percent preferred stock outstanding, currently selling for $81 per share. Market: 10 percent market risk premium and 5.1 percent risk-free rate. What is the company's WACC?
The average height of the 25 students in Mr. Stanton's tenth grade math is known to be 66
Company has an Un levered beta of 1.1. Financed with 50% debt and levered beta of 1.6. If the risk free rate is 5.5% and the market risk premium is 5% how much is the additional premium that shareholders are required to be compensated for financial r..
The market has an expected rate of return of 9.2%. the long-term government bond is expected to yield 4.3% and the U.S Treasury bill is expected to yield 3.5% the inflation rate is 3.1% what is the market risk premium?
Templeton extended care facilities is considering the acquisition of a chain of cemeteries for $400 million since the primary asset of this business is real estate Templeton’s management has determined that they will be able to borrow the majority of..
Assume that you are considering the purchase of a 20-year, non callable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 8.4% nominal yield to maturity on this..
Joe Madden buys a piece of equipment for $200,000. He puts down $40,000 and finances $160,000. Joe's opportunity cost is 4 percent, and the lender's interest rate is 8 percent. Find the weighted average of cost of capital WACC?
A 10 year corporate bond with a face value of $1,000 pays $55 interest every year. What is the bond's fair market price if investor's required return is 8.0%? (FVIFR=8.0,N=10 = 2.1589 ; PVIFAR=8.0,N=10 = 14.4866)
Delta Inc. is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually. The firm has a marginal tax rate of 34 percent, and its required rate of re..
Garvin Enterprises’ bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield?
The IRR for a project is the discount rate that: a. sets the PV of the project’s future cash inflows equal to the initial cash outflow. b. sets the NPV of the project equal to zero. e. makes the PV of the future cash flows c. makes the NPV negative. ..
John purchased 100 shares of Black Forest Inc. stock at a price of $159.83 three months ago. He sold all stocks today for $160.60. During this period the stock paid dividends of $5.85 per share. What is John’s annualized holding period return (annual..
You have inherited $25,000. You plan to invest the inheritance in a portfolio of stocks and bonds yielded 9%. Your goal is to have this investment fund your retirement, which you estimate will require $3,200,000. Using the Rule of 72, how long will i..
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