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Southern Mining's outstanding debt has a before-tax cost of 8.5 percent and a current market value of $37.5 million. The market value of the firm's outstanding equity is $62.5 million. Given Southern's current financial/capital structure, the firm's cost of equity capital is 14.9 percent. Southern is planning to issue an additional $12.5 million of common stock in order to retire $12.5 million of outstanding debt. Assuming that Southern's debt is currently risk free and that the corporate tax rate is zero (as are all personal income tax rates), determine
(a) the impact of the recapitalization on Southern's cost of equity capital,
(b) the impact of the recapitalization on Southern's weighted average cost of capital
on april 30 2010 one year before maturity red products inc. retired 150000 of 8 bonds payable at 103. the book value of
During the twelve month period they owned the stock, Cisco Systems paid dividends that totaled $0.70. Calculate the Hernandez's total return for this investment.
If you supply 117,000 cartons per year, you can afford as much as $ in fixed costs and still break even. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16)) Hint: It's more than $187,200.
Risk as well as return of a stock involves calculation of expected return, standard deviation and variation
2. tco c a firm buys on terms of 28 net 45 days it does not take discounts and it actually pays after 58 days. what is
Using only government websites report the current GDP, the current Federal deficit, the current Federal debt, the bottom line of the current (last) budget approved by Congress (surplus or shortage). Note: the fiscal year for the federal government i..
assume a 5-year treasury bond has a coupon rate of 4.5. a. give examples of required rates of return that would make
Suppose the firm has no excess cash. Assume the spot rate of the pound is $2.02, the 180-day forward rate is $2.00. The British interest rate is 5 percent,
Consider the following Investment: Time Cash Flow 1 $1300 2 $2400 3 $1100 4 $1200 The investment outlay is $6000. The required return is 10.75%. Required payback period is 18 months.
describe why firms in the airline industry have so much debt compared to other industries. what industry has the lowest
Three years ago, you purchased 150 shares of IBM stock for $88 a share. Today, you sold your IBM stock for $103 a share. For this problem, ignore commissions that would be charged to buy and sell your IBM shares.
Here are stock market and Treasury bill returns between 2000 and 2004: Calculate the risk premium on common stock in each year?
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