Pizza express enterprises has a target capital structure of

Assignment Help Finance Basics
Reference no: EM13571994

Pizza Express Enterprises has a target capital structure of 50% debt and 50% ordinary equity. The firm is considering a new independent project which has an IRR of 13% and which is not related to pizza or pasta. However, a proxy firm has been identified that is exclusively engaged in the new line of business. The proxy firm has a beta of 1.38. Both firms have a marginal tax rate of 40%, and Pizza Express's before-tax cost of debt is 12.0%. The risk-free rate is 10% and the market risk premium is 5%.

REQUIRED:

Should the firm accept or reject the proposed project? Why?

Reference no: EM13571994

Questions Cloud

Acl injures crohns disease adhdadd bulimia bipolar disorder : i need a paper on the following topics answering all the questions below each topics should be 2 pages.topic acl
Your company had net sales of 70000 over the past : your company had net sales of 70000 over the past year.nbspduring that time average receivables were 10000.nbsp what
How large would the annual net cash inflows from the : mercredi inc. is considering investing in automated equipment with a ten-year useful life. managers at highpoint have
Better food company recently acquired an olive oil : better food company recently acquired an olive oil processing company that has an annual capacity of 2000000 liters and
Pizza express enterprises has a target capital structure of : pizza express enterprises has a target capital structure of 50 debt and 50 ordinary equity. the firm is considering a
Calculate the amount of factory overhead to be allocated to : the sawtooth leather company manufactures leather handbags and moccasins. for simplicity reasons they have decided to
Choosing between two projects with acceptable payback : choosing between two projects with acceptable payback periods shell camping gear inc. is considering two mutually
What is needed for an auditor to understand clients : what is needed for an auditor to understand clients business processes and accounting systems? what type of computer
Consider the factors used to analyze and compute the npv of : consider the factors used to analyze and compute the npv of newproject. the text says if the return is positive we

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the current value of one share of this stock

The company just paid its annual dividend in the amount of $1.50 per share. What is the current value of one share of this stock if the required rate of return is 7.00 percent?

  Which is more expensive for the firm

Debt and equity financing of a venture requires a return to the providers. Describe the forms in which a provider of debt and the provider of equity receive their return. Which is more expensive for the firm? Which is more risky for the investor a..

  Research the current within the last two months market data

research market data on bondsresearch the current within the last two months market data on bonds from atampt dell and

  Why companies hd and ld have the same total assets

If the interest rate the companies pay on their debt is less than their basic earning power (BEP), then Company HD will have the higher ROE.

  Hedging interest rate risk

A bond manager who wants to hold the bond with the greatest potential volatility would be wise to hold;

  Create atwo-page single space memorandum plus appendices

create atwo-page single space memorandum plus appendices about a sports bar wanting to open downtown in an urban area

  You wrote a piece of software that does a better job of

you wrote a piece of software that does a better job of allowing computers to network than any other program designed

  Most statistics are used in ways that are compliant with

most statistics are used in ways that are compliant with how we think they should be. however there is and always has

  Sandra deposits 2750 in an account paying 9 apr compounded

sandra deposits 2750 in an account paying 9 apr compounded every 3 months. if she makes no payments or withdrawals for

  Explain the implication the law of one price has for price

Explain the implication the Law of One Price has for the price of a financial security. Provide examples.

  What are the percentage returns

Suppose a stock had an initial price of $69.27 per share, paid a dividend of $4.5 per share during the year, and had an ending share price of $86.98. What are the percentage returns if you own 25 shares?

  Find discounted payback period for the cash flows if

an investment project has annual cash inflows of 3600 4500 5700 and 4900 and a discount rate of 15 percent.what is the

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd