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Johnson Tire Distributors has an unlevered cost of capital of 12 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,400. The company has $2,800 in bonds outstanding that have a 7 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?Multi-choice:A)9.51 percentB)10.86 percentC)8.15 percentD)12.22 percentE)13.58 percentPlease show workings.Qu2)Jemisen's firm has expected earnings before interest and taxes of $1,800. Its unlevered cost of capital is 14 percent and its tax rate is 34 percent. The firm has debt with both a book and a face value of $2,700. This debt has a 7 percent coupon and pays interest annually. What is the firm's weighted average cost of capital?Multi-choice:A)12.69 percentB)12.86 percentC)13.54 percenD)13.16 percentE)12.63 percentQu3)Central Systems, Inc. desires a weighted average cost of capital of 6 percent. The firm has an after-tax cost of debt of 4 percent and acost of equity of 8 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?Multi-choice:A)1.17B).90C)1.10D).83E)1.00Please show workings
Is it profitable to replace the year-old machine?
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Assuming that the company maintains the same payout ratio, what will be its stock price following the recapitalization? Assume that shares are repurchased at the price calculated in Part a. Round your answer to the nearest cent. Do not round inter..
The following information refers to a six-month call option on the stock of XYZ, Inc.
Write a review of the attached article, "Clearing, Counterparty Risk, and Aggregate Risk." Explain the key points that the author was trying to communicate. The review should be at least two pages.
It is estimated that the firm's after tax cash flow will be increased by $100,000 starting at the end of the second year, and that this incremental flow would increase at a 10 percent rate annually over the next 10 years. What is the approximate p..
What will be the annual net savings? Assume that the T-bill rate is 2.6 percent annually.
Romeo & Juliette are competitors in selling college finance textbooks. The separate capital structures of each corporation are as follows:
Suppose you are planning an investment which would entail $5000 payments each year for 20 years. The investment will pay 7% interest.
In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Wells generate?
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