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Question: Companies U and L are identical in every respect except that U is unlevered while L has $9 million of 6% bonds outstanding. Assume that (1) there are no corporate or personal taxes, (2) all of the other MM assumptions are met, (3) EBIT is $1 million, and (4) the cost of equity to Company U is 10%. What value would MM estimate for each firm? Enter your answers in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to two decimal places. Company U $ million Company L $ million What is rs for Firm U? Round your answer to two decimal places. % What is rs for Firm L? Do not round intermediate calculations. Round your answer to two decimal places. % Find SL. Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. $ million What is the WACC for Firm U? Round your answer to one decimal place. % What the WACC for Firm L? Round your answer to one decimal place. % Suppose VU = $20 million and VL = $22 million. According to MM, are these values consistent with equilibrium?
molly is considering a project with cash inflows of 918 867 528 and 310 over the next four years respectively. the
The average net book value of assets during the quarter was $1.5 million. If the company has a required rate of return of 15 percent on investment, what was residual income for the quarter?
Schwarzentraub Industries expected free cash flow for year is $500,000 in the future free cash flow is expected to increase at a rate of 9 percent.
Calculate the price, and BEY of a treasury bill which matures in 181 days, has a face value of $10,000, and is currently being quoted at a bank discount yield of 2.32%.
Bigtime corporation has sales of $14,900, costs of $5,800, depreciation expense of $1,300 and interest expense of $780.
If Whitewall is expected to increase its annual dividend by 7.30 percent per year into the foreseeable future and the current price of Whitewall's common shares is $12.48, what is the cost of common stock for Whitewall? Round answer to 2 decimal p..
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A stock will pay dividends of $3, $5, and $9 over the next three years, and then increase dividends at a rate of 9% afterwards. Its required rate of return is 20%. What is the value of the stock?
translation exposure deals with the effects of exchange rate fluctuations on a multinational firms consolidated
after deciding to buy a new car you can either lease the car or purchase it with three-year loan. the car you wish to
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