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Fournier Industries, a publicly traded waste disposal company, is a highly leveraged firm with 70% debt, 0% preferred stock, and 30% common equity financing. Current the risk-free rate is about 4.5%, and the return on the S&P 500 (the market proxy) is 12.7%. The firm's beta is currently estimated to be 1.65.
(a) What is Fournier's current cost of equity?(b) If the firm shifts is capital sturcture to a less highly leveraged position by selling preferred stock and using the proceeds to retire debt, it expects its beta to drop to 1.20. What is its cost of equity in this case?(c) If the firm shifts its capital strututure to a less highly leveraged position by selling additional shares of common stock and using the proceeds to retire debt, it expects it beta to drop to .95, What is its cost of equity in this case?
Five million shares issued with a current market price of 6. Equity holders require a 9% return and $10 million face value of Corporate bonds outstanding.
Computation of the borrowable amount through debentures and Delaware borrow under a term loan at 13 percent interest without breaching the indenture restriction
What will the cash flows for this project - develop a new computer game. The firm is planning to spend $200,000 on a machine to produce the new game.
When you retire, you plan to withdraw an equal amount for each of the next 25 years at the end of each year and have nothing left. Additionally, when you retire you will transfer your money to an account that earns 6.75 percent.
The project requires an initial investment in net working capital of $285,000 and the fixed asset will have a market value of $225,000 at the end of the project.
Grossman Enterprises has an equity multiplier of 2.31 times, total assets of $2,014,436, an ROE of 16.50 percent, and a total assets turnover of 2.41 times. Calculate the firm's sales and ROA.
According to the expectations theory of interest rates, what would you expect the four-year Treasury rate to be one year from now?
Friendly's Quick Loans, Inc., offers you $8.25 today but you must repay $10.45 when you get your paycheck in one week (or else).
Alaska, Inc., plans to create and finance the subsidiary in Mexico which produces computer components at a low cost and export them to other countries. It has no other international business. The subsidiary will produce computers and export them t..
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what is the market-to-book ratio? Enter your answer rounded off to two decimal points. Hint: Market value per share is same as market price per share.
The Fridge- Air Company's preferred stock pays a dividend of $ 4.50 per share annually. If the required rate of return on comparable quality preferred stocks is 14 percent, calculate the value of Fridge- Air's preferred stock.
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