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Amgel Manufacturing Company's current capital structure is compromised of 30% debt and 70% equity (based on market values). Amgel's equity beta (based on its current level of debt financing) is 1.20, and its debt beta is 0.29. Also, the risk free rate of interest is currently 4.5% on long term government bonds. Amgel's investment banker advised the firm that, according to its estimated, the market risk premium is 5.25%. A. What is your estimate of the cost of equity capital for Amgel (based on the CAPM)? B. If Amgel's marginal tax rate is 35%, what is the firm's overall weighted average cost of capital (WACC)? C. Amgel is considering a major expansion of its current business operations. The firm's investment banker estimates that Amgel will be able to borrow up to 40% of the needed funds and maintain its current credit rating and borrowing cost. Estimate the WACC for this project.
Create an equally weighted portfolio of five computer software stocks. Is such a portfolio a diversified portfolio? What is the beta of the portfolio? What is the expected return of the portfolio?
You also need an initial investment in net working capital of $144,000. If your tax rate is 39 percent and you require a 13 percent return on your investment, what bid price per carton should you submit?
If the one-year Eurodollar rate is 6 percent and the two-year Eurodollar rate is 7 percent, the one-year forward rate implicit in the Eurodollar yield curve is very close to:
you are the cfo of a u.s.-based multinational firm. you need to borrow 1 million for six months to meet some working
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It's almost six month later. Chelsea Club is selling for $44. Amanda's options are about to expire and Seth exercises.
1 a firm has net working capital of 2138and current assets of 6665. what is the current ratio?2. abc inc. has sales of
Do you believe the partnership or the corporation form of ownership is better? How does an investor choose between the two forms of ownership?
Sales are expected to increase by 3.5 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year?
What is the value of a perpetuity with an annual payment of $50 and a discount rate of 4%?
cash flows statements types of activities vertical analysis of statements price earnings ratio and basic accounting
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