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Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 9% and its marginal tax rate is 40%. The current stock price is P0 = $28.50. The last dividend was D0 = $2.50, and it is expected to grow at a 8% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. Do not round your intermediate calculations.
rs = %
WACC = %
Describe a firm that used debt instead of stock or vice versa to raise new capital. What was the result? How was the decision interpreted by shareholders?
Sims contracted in writing to sell Blake one hundred electric motors at a price of $100 each, freight prepaid to Blakes warehouse. By the contract of sale, Sims expressly warranted that each motor would develop twenty-five-brake horsepower. State all..
Suppose health care costs in the U.S. account for 10% of current GDP, but are growing at a continuously compounded rate of 4.8% rate,
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A firm plans to retire outstanding bonds in the next planning period. the statements that will be affected are the: a. pro forma balance sheet and cash budget b.pro forma income statement and pro forma balance sheet c. cash budget and statement of re..
A stock has an expected return of 3%. What is its beta? Assume the risk-free rate is 7% and the expected rate of return on the market is 12%.
Given a MPT with a starting pool balance of $1,000,000, whose underlying collateral is a group of 10 year FRMs with annual payments, interest rate on the underlying mortgages=10%, servicing fees=0.5%, and prepayment projected to be 10% annually, what..
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A stock has a beta of 1.17, the expected return on the market is 11.1 percent, and the risk-free rate is 4.9 percent. What must the expected return on this stock be?
Because investors like dividends, the higher the company's dividend growth rate, the lower the company's cost of common equity. If a project is acceptable using the NPV criteria, it will also be acceptable when using the profitability index and IRR c..
Journalize the entries to record the following selected transactions. Sold $6,800 of merchandise on account, subject to a sales tax of 6%. The cost of the merchandise sold was $4,010. For a compound transaction, if an amount box does not require an e..
Determine the consolidated income appropriate to Priscilla and income appropriate to the NCI
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