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Union Street Records is considering a new capital structure. The CFO has prepared a list of options:
The company currently has a debt-to-capital ratio of 0.75 (option 4) and an equity beta of 1.9. The tax rate is 34%.
The risk-free rate is 2% and the expected equity market risk premium is 9%.
1. What is the unlevered beta?
2. Find the levered beta for each option. What is the levered beta for option 2 (debt-to-capital ratio of 0.25)?
3. Find the cost of equity for each option. What is the cost of equity for option 2 (debt-to-capital ratio of 0.25)?
4. Find the WACC for each option. What is the WACC for option 3 (debt-to-capital ratio of 0.5)?
5. What is the WACC at the optimal capital structure?
Discuss the functions of management. Which function of management is the most important? Support your answer.
The term of the non-cancelable lease is 10 years, with no renewal option. Payments of $120,000 are due on June 30 of each year.
alva can earn 5% before tax interest on a corporate bond or a 4% dividend on a preferred stock. Assuming that the appreciation in value is the same, which investment produces the greater after tax income?
the following transactions were completed by hobson inc. whose fiscal year is the calendar year2010july 1. issued
dennis is currently considering investing in municpal bonds that earn 8.80 percent interest or in a taxable bonds
in the communication business companies often use the linesof other communications companies. this line usage is a
Amortization of excesses in periods subsequent to the purchase would affect which sections of a cash flow statement?
The long-term liability for deferred income taxes arises because
saturn issues 8.0 five-year bonds dated january 1 2011 with a 600000 par value. the bonds pay interest on june 30 and
What is the amount(s) related to the bonds that Patey will report in its income statement for the year ended December 31, 2011? (Ignore income taxes.)
Karl pearson coefficient of skewness of distribution is +0.32.its standard deviation is 6.5 and mean is 29.6. Find the mode and median of the distribution.
1. another name for the statement of revenue and expenses financial accounting report is the statement of cash flows.2.
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