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The company currently has total assets of $12,000,000. They want to expand with an additional plant in West Palm Beach at a cost of $5,000,000. The new operation will be financed in its entirety with preferred equity from Miramar Trust.
Miramar Trust will receive a $4 dividend on each share of its preferred stock of $50.00. The equity of the company is 40% with an annual cost of 4%, 50% of the original capital structure is in debt with a rate of 8% and the remainder is in preferred equity at the same rate as of the new preferred stock and also held by Miramar Trust.
Calculate the WACC c) before and d) after the expansion.
e) How many shares will Miramar Trust hold in The BBQ Company?
Carter's Home Supply has a $35 million bond issue outstanding with a coupon rate of 8.5 percent. The tax rate is 38 percent. What is the present value of the tax shield?
Prepare the journal entry to reflect the initial $86,000 investment and evaluate the three proposals for expansion, providing the pros and cons of each option
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Summerdahl Resorts' common stock is currently trading at $40.00 per share. The stock is expected to pay a dividend of $1.25 a share at the end of the year (D1 = $1.25), and the dividend is expected to grow at a constant rate of 5% a year. What is the..
Howard has received several verbal and written threats, and his house has been spray-painted with graffiti. The atmosphere has become so hostile that Howard has decided to sell his new home and relocate in a different city. Will he be eligible to exc..
A equally weighted portfolio is formed with 4 securities A, B, C, D. Summary statistics of the securities are listed below. What is the standard deviation of the portfolio? . Variance of A = 493.73 Variance of B = 156.25 Variance of C = 1040.06 Varia..
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