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Mustard Patch Doll Company needs to purchase new plastic moulding machines to meet the demand for its product. The cost of the equipment is $100,000. It is estimated that the firm will generate, after tax, operating cash flow (OCF) of $22,000 per year for the next seven years. The firm is financed with 40% debt and 60% equity, both based on market values. The firm's cost of equity is 16% and its pre-tax cost of debt is 8%. The flotation costs of debt and equity are 2% and 8%, respectively. Assume the firm's tax rate is 34% and ignore the effects of CCA depreciation.
a. What is the firm's tax adjusted WACC?b. Ignoring flotation costs, what is the NPV of the proposed project?c. What is the weighted average flotation cost, fA, for the firm?d. What is the dollar flotation cost of the proposed financing?e. After considering flotation costs, what is the NPV of the proposed project?
An investor is considering a bond that currently sells at a discount ($953) to the face value of $1,000. The coupon rate is 9.25% paid semiannually. If there are 15 years left on the bond what is the yield to maturity?
go to www.federalreserve.govgeneral.htmlthttpwww.federalreserve.govgeneral.htmgt and click on the link to general
talbot industries is considering an expansion project. the necessary equipment could be purchased for 9 million and
What are the implications of a change in the return on equity with an increase in debt financing?
Axel Telecommunications has a target capital structure that Problems consists of 70 percent debt and 30 percent equity. The company anticipates that its capital budget for the 13 upcoming year will be $3,000,000.
assume the debt in the previous question is trading at 1035. how can you earn a riskless profit from this situation
Please who work so I can see how you came up with the answer. Really looking to understand more so then getting an answer.
what is a lower bound for the price of a 4-month call option on a nondividend-paying stock when the stock price is 28
suppose that the firm's cost of carrying receivables was 8% annually. how much would the toughened credit policy save the firm in annual receivables carrying expense?(assume that the entire amount of receivables had to be financed)
this question requires you among other things to calculate the stock price for yahoo inc. yhoo and provide the needed
how can the existence of asymmetric information provide a rationale for government regulation of financial
You have noticed that last year,private equity gourps were buying public companies at big premium ,what is the implication of this in term of changes in investor risk aversion, if any? what is happening to the size of risk premium paid by investor..
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