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1) WACC
Shi Importer’s balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi’s tax rate is 40%, rd= 6%, rps= 5.8%, and rs =12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?
2) Cost of Equity
Radon Home’s current EPS is $6.50. It was $4.42 5yrs ago. The company pays out 40% of its earnings as dividends, and the stock sells for $36.
Calculate the historical growth rate in earnings. (Hint: This is a 5-year growth period.)
Calculate the next expected dividend per share, D1 (Hint: D0= 0.4 ($6.50) = $2.60.) Assume that the past growth rate will continue.
What is Radon’s cost of equity, rs?
A bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?
The following is from an article in the Wall Street Journal, describing events in the market for Treasury securities on the given day:” Treasury prices were mixed, with the shorter end of the yield curve rising and the longer- dated Treasury’s fallin..
Does your current organization (or an organization you have worked for in the past,) exercise good financial planning and control? Can it be improved? How? Why? Be prepared to cite real life examples as evidence.
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Prepare a three page paper that responds to the coca-cola research case questions Using the web, access the Coca-Cola Company's 2010 financial statements
Consider an annual coupon bond with a face value of $100, 15 years to maturity, and a price of $88. The coupon rate on the bond is 5%. If you can reinvest coupons at a rate of 3.5% per annum, then how much money do you have if you hold the bond to ma..
In the hope of high returns, venture capitalists provide funds to finance new companies. However, potential competitors and structures of the market into which the new firm enters are extremely important in realization of profits.
Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The T-bill rate is 7%. You estimate that a passive portfolio invested to mimic the S&P 500 stock index yields an expected rate of return ..
LLT Company’s stock is currently selling for $105 per share. LLT just paid its annual dividend, so the next one won’t be paid until one year from today. If you required an annual rate of return of 15% on an investment in LLT’s common stock, what amou..
Storico Co. just paid a dividend of $1.30 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent divid..
Discuss the advantages and disadvantages to using a traditional IRA, including when it may be advantageous to use a non deductible IRA
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