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IDX Tech is looking to expand its investment in advanced security systems. The project will be financed with equity. You are trying to assess the value of the investment, and must estimate its cost of capital. You find the following data for a publicly traded firm in the same line of business:
Debt Outstanding (book value, AA-rated) $400 million
Number of shares of common stock 80 million
Stock price per share $15.00
Book value of equity per share $6.00
Beta of equity 1.20
What is your estimate of the project's beta? What assumptions do you need to make?
Suppose you purchased one of Great White Shark Repellant Co.'s 7 percent coupon bonds one year ago for $870. These bonds make annual payments and mature 11 years from now.
Calculate the number of years it will take $2,500 to grow to $25,000 assuming an annual rate of return of 12%.
A company whose charter authorize 10 million shares, has sold 6 million to the public. Of these, 5 million are in the hands of investors today.
Find out percentage of the firm's asset does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is
Calculate external funds needed (EFN) and prepare pro forma income statements and balance sheet assuming growth at precisely this rate. Recalculate the ratios in the previous question. What do you observe?
Andre has asked you to estimate his business, Andre's Hair Styling. Andre has 5-barbers working for him. Each barber is paid $9.90 per hour and works a 40-hour week and a fifty week year, regardless of number of haircuts.
Suppose interest rate levels rise to the point where the preferred stock now yields 13 percent. What would be the value of Rolen's preferred stock? Round your answer to two decimal places.
The firm can borrow at a rate of 8%. The corporate tax rate is 30%. What is the NPV of the lease relative to the purchase?
Which of the following could be permitted as eligibility requirements for a qualified pension plan?
Free cash flow in year 5 is expected to be $145 million. MiCasa, S.A. is expected to be sold at its terminal value. Calculate the terminal value using the multiple method.
The sofas are sold out before they are restocked. What is the economic order quantity?
Mary sells the share to Tom on October 20th, Tom sells the share to William on October 30th. Who will receive the dividend?
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