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Your company has two divisions: One division sells software and the other division sells computers through a direct sales channel, primarily taking orders over the internet. You have decided that Dell Computer is very similar to your computer division, in terms of both risk and financing. You go online and find the following information: Dell's beta is 1.21, the risk-free rate is 4.8 %, its market value of equity is $ 67.5 billion, and it has $ 709 million worth of debt with a yield to maturity of 6.1 %. Your tax rate is 40 % and you use a market risk premium of 5.1 % in your WACC estimates. a. What is an estimate of the WACC for your computer sales division? b. If your overall company WACC is 12.4 % and the computer sales division represents 36 % of the value of your firm, what is an estimate of the WACC for your software division?
FINC 430 Financial Management - Acquisition Proposal Research Project Describe what you believe to be the primary issues/needs of the parties involved (i.e., target firm stakeholders) and -Recommend a deal structure that addresses the primary needs ..
Its manager stated that it did not want to pursue a project that had a one-in-three chance of having a negative NPV. Do you agree with the manager's interpretation of the analysis? Explain.
Broussard Skateboard's sales are expected to increase by 25% from $7.4 million in 2013 to $9.25 million in 2014. Its assets totaled $2 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as proj..
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt. If Vandell has $10.32 million in debt, what is the current value of Vandell's stock?...
What is the net price that FROOGLE.com will receive for its shares? - How much money will FROOGLE.com raise in the offering?
Determining Production Capacity Needed at Toyota Motor Manufacturing of Canada (TMMC) A. To maximize profit earned during this period, which production capacity should TMMC in 2000 decide to build - 10,000, 15,000, 20,000, 25,000, or 30,000 cars?
Diane is interested in buying a five-year zero coupon bond with a face value is $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?
The board, which is concerned about this, asks for an explanatory memorandum, again, for the next board meeting, summarising the main provisions of the relevant legislation and setting out procedures which the company should adopt to ensure that t..
You know the following. ATO, ITO and FATO are 2, 6, and 2.5 respectively while for the industry they are 4.4, 19 and 4 respectively. The current ratio and quick ratio are 1 and 1.5 for the firm and 2.3 and 2.0 for the industry respectively. The avera..
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $2.00 coming 3 years from toda..
A firm has decided to replace an existing asset with a newer Model. The existing asset originally cost $30,000 . The current book value of the existing asset for tax purposes is $ 14,400. The existing asset can be sold for $ 25,000. The new asset wil..
Janicex Co. is growing quickly. Dividends are expected to grow at a rate of 26 percent for the next three years, with the growth rate falling off to a constant 8 percent thereafter. If the required return is 15 percent and the company just paid a div..
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