User Account

All Pages

?rms cost of equity after recapitalization

Assignment Help Finance Basics
Reference no: EM132017057

Company TNT currently has zero debt in its capital structure, a total market value of $60 million, and an equity beta of 0.75. The company is considering a new capital structure, by issuing $25 million worth of debt and using the proceeds to buy back $25 million worth of equity (no impact on the ?rms total market value). The company's corporate tax rate is 30%. Risk free rate is 6% and market return is 14%. How much would be the ?rms cost of equity after this recapitalization?

(a) 15.75% (b) 15.00% (c) 12.00% (d) 19.56% (e) Cannot be determined without additional information could you please help me solve this question?

Reference no: EM132017057

Questions Cloud

Prepare an overhead budget that reflects production : Stu Barnard, controller for Apling Company, has been instructed to develop a flexible budget for overhead costs. Prepare an overhead budget
Deal with seasonal sales fluctuations : In a nutshell they are unsecured IOU's (I owe you). So how might a firm use commercial paper as a way to deal with seasonal sales fluctuations
What is the total cost to the issuer of the ipo : ABC Ltd., a technology company, issues a $16 million IPO providing proceeds to ABC of $3.6 per share, from an offer price to the public of $4 per share.
What is the project profitability index : The project's initial investment is $43974 and the firm's weighted average cost of capital 10.7 per cent. What is the project's profitability index
?rms cost of equity after recapitalization : Risk free rate is 6% and market return is 14%. How much would be the ?rms cost of equity after this recapitalization?
How much should you be willing to pay for bond x today : How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.)
Prepare an annual budget for the activity : Prepare an annual budget for the activity, assuming that all of the capacity of the activity is used (use miles as the activity driver)
Accounts receivables from the planned relaxation : A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $2.09 million.
Determine and specify the amount of bad debts expense : Determine and specify the amount of bad debts expense that appears on the income statement. Describe how this amount is classified

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain patient service revenue and other revenue

Explain Patient service revenue and other revenue. Gross revenue and net revenue. Charity care and bad debt losses on the income sheet.

  What would be your expected return

(Preferred stockholder expected return) You are considering the purchase of Kline, Inc.‘s stock at a market price of $36.72 per share.

  How much would be on deposit after 9 years

Suppose that you placed 1523 in a bank account that earned an APR of 13%. How much would be on deposit after 9 years with semi-annual compounding?

  Physiological explanation of the observed findings

Does the caffeinated beverage affect the MAP of the study group? Provide a physiological explanation of the observed findings.

  Determine the compounding frequency of each card

You will use the information from all your credit cards. If you do not have credit cards, go online and find the information of at least 3 major credit cards.

  Today you signed loan papers agreeing to borrow 495485 at 9

today you signed loan papers agreeing to borrow 4954.85 at 9 compounded monthly. the loan payment is 143.84 a month.

  Determine the price of an average price asian call option

Determine the price of an average price Asian call option. Use an exercise price of 95. Count the current price in determining the average. Comment on whether you would expect a standard European call to have a lower or higher price

  Existence for at least five years

Select one publicly traded company that has been in existence for at least five years and discuss its value chain. Also, answer the following questions

  Capital budgeting case

Capital Budgeting Case - From the given case information, calculate the firm's WACC then use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects with a capital rationing constraint. After you choose the project(s), r..

  How much larger is the payment at the first reset date

In year 3, LIBOR is at 4%. In year 4, LIBOR is at 4.5%. How much larger (in dollars, rounded to the nearest cent) is the payment at the first reset date.

  Return on equity for similar stocks

The dividend is not expected to grow. The return on equity for similar stocks is 12%. What is P0? (Show workings)

  Driver enterprises reports earnings before interest and taxe

Driver Enterprises reports earnings before interest and taxes (EBIT) of $367,040 and interest expense of $31,602. Included in its reported operating expenses were operating lease expenses of $150,024. In a footnote, the company reports that it has fu..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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