Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
6. A corporation has the following balance sheet (liabilities side):Current Liabilities $2,000Long-Term debt 5,000Preferred Stock 2,000Common Stock 8,000Retained Earnings 3,000Total $20,000Currently, the riskless interest rate is 8%; the corporate tax rate is 50%; the current price of a share of common stock is $20; an the dividends have been level at $1 per share per year for many years. Recently, company executives have considered expanding the existing business by acquiring a competitor. To do so, they must calculate the WACC of the firm and estimate the NPV of acquisition. Because the acquisition is of the same risk as the firm, the WACC (unlevered equity cost) can be used. A financial executive has used the following procedure to calculate the WACC. Debt and preferred stock are fixed claims offering a fairly secure constant return, and so their before-tax cost is assumed to equal the riskless rate. The dividend yield has held constant at about 5%; so this is used as the cost of new and retained equity. Finally, the balance sheet shows the firm to be composed of 25% debt, 10% preferred stock, 55% equity (common plu retained), and 10% current liabilities. Current liabilities are assumed to be costless; therefore the WACC is 4.55%. Comment on this procedure.
You have just taken over as a fund manager at a brokerage firm.
Fixed assets can be sold today for= $23,300. Determine the total book value of assets of Alaris?
A stock has a beta of 1.08 and a standard deviation of 9.6%. The risk-free rate is 4.2% and the market risk premium is 7.8%.
Edward purchased stock last year as follows: In April of this year, Edward sells 80 shares for $250. Edward cannot specifically identify the stock sold. The basis for the 80 shares sold is
Calculation of After-Tax Cost of Debt and Cost of Preferred Stock and Cost of Equity and WACC under CAPM
Krell corporation has a share price of $22.00 today. If Krell is expected to pay a dividend of $0.88 this year, and its stock value is expected to grow to $23.54 at the end of the year.
Prepare the pro forma cash flow statements for Bloomington Clinics
In the cash market, an American Bank (A) can issue either yen 1 billion worth of bonds yielding 5.3% p.a. and priced at par or $10 million worth of bonds yielding 6.5% p.a. and priced at par.
Explain how expected rate of return used to value stock.
What aspects of this organizational structure seem to work well and those aspects that seem to be dysfunctional.
Briarcrest Condiments is spice-making firm. Newly, it developed new process for producing spices. Compute the NPV if discount rate is 13.74%?
The Felix Filter Corporation maintains a debt-equity ratio of .6. The cost of equity is 16 percent, the cost of debt is 11% and the marginal tax rate is 30 percent.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd