Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question 1
Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 14 years to maturity that is quoted at 106 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually.
What is the company's pretax cost of debt? (Do not round intermediate calculation and round your answer to 2 decimal places. (e.g., 32.16))
Cost of debt
%
If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
Question 2
Erna Corp. has 4 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. Erna Corp. also has two bond issues outstanding. The first bond issue has a face value of $90 million, has a coupon of 6 percent, and sells for 98 percent of par. The second issue has a face value of $60 million, has a coupon of 7 percent, and sells for 106 percent of par. The first issue matures in 21 years, the second in 3 years.
a.
What are Erna's capital structure weights on a book value basis? (Round your answer to 4 decimal places. (e.g., 32.1616))
Equity/Value
Debt/Value
b.
What are Erna's capital structure weights on a market value basis? (Round your answer to 4 decimal places. (e.g., 32.1616))
Question 3
You are given the following information for Lightning Power Co. Assume the company's tax rate is 40 percent.
Debt:
8,000 6.9 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.
Common stock:
410,000 shares outstanding, selling for $59 per share; the beta is 1.15.
Preferred stock:
19,000 shares of 3 percent preferred stock outstanding, currently selling for $79 per share.
Market:
9 percent market risk premium and 4.90 percent risk-free rate.
What is the company's WACC? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
WACC
Question 4
Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.89 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of 0.80, a cost of equity of 12.9 percent, and an aftertax cost of debt of 5.7 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 1 percent to the cost of capital for such risky projects.
What is the maximum initial cost the company would be willing to pay for the project? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
Maximum cost
$
university food systems inc. has issued a 40 percent stock dividend. the company has 752000 shares authorized and
suppose the payoff from a merger arbitrage operation is 5 million if successful -20 million if not. the probability of
Your company is considering a new project that will require $912,000 of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $142,000 using straight-line depre..
The above advertisement is designed to encourage companies to donate generously to worthy health-related causes.
1. estimate the base case cost of each alternative regarding the provision of ultrasound services. for now ignore the
What is the variance of this portfolio? (Do not round your intermediate calculations.)
A firm is considering two mutually exclusive projects that have the annual cash flows shown below. Based on NPV analysis, which project should be accepted? The required rate of return is 7.0000%
Explain how the Financial Reform Act of 2010 applies to hedge funds
suppose payments were made at the end of each month into an ordinary annuity earning interest at the rate of 9year
answer length for each question one-half to one-page single-spaced. for q1 and q2 only1. why is amazons cash cycle so
If a borrower promises to pay you $1,900 9 years from now in return for a loan of $1,000 today, what effective annual interest rate is being offered? A. 5.26% B. 7.39% C. 9.00% D. 10.00%
discuss the relationship between the price of a bond and interest rates. why does the price of a bond change over its
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd