Gunnar Corp uses no debt. The weighted average cost of capital is 9 percent. If the current market value of the equity is $37 million and there are no taxes, what is the cost of equity for this corporation? O 9% 6% 7% 8%
Q: Citigroup SmithBarney (Reais). In a report dated June 17, 2003, Citigroup SmithBarney calculated a…
A: Risk free rate = 9.90% Beta = 1.40 Market risk premium = 5.50% As per CAPM, the cost of equity…
Q: Stevensons bakeries and all equity firm that has a projected perpetual EBIT of $144,000 per year.…
A: EBIT = $144,000 Cost of equity = 10.5% Tax rate = 21% Debt rate = 5.8% Debt-equity ratio = 54%
Q: McCabe Corporation is expected to pay the following dividends over the next four years: $15, $11,…
A: D1 = $15 D2 = $11 D3 = $9 D4 = $2.95 D5 = D4(1 + g) = $2.95(1 + 0.04) = $3.068 Required Return, r =…
Q: You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $73,000, has a 5-year…
A: Given, Pillsbury 707 Cost = $73,000. 5-year life Keebler CookieMunster Cost = $99,500 7-year life,…
Q: You have a portfolio with a standard deviation of 30% and an expected return of 19% You are…
A: Standard deviation of the portfolio is calculated using following equation Portfolio standard…
Q: For the given corporate bond, whose annual simple interest rate is provided, find the semiannual…
A: Compound = Semiannually = 2 Principal Amount = p = $11,900 Time = t = 10 * 2 = 20 semiannual…
Q: You have been asked by the president of your company to evaluate the proposed acquisition of a new…
A: FCF is also known as Free cash Flow. It is that amount which is earned from the project from…
Q: Interest compounding daily than continuous compounding for a known interest rate will provide a…
A: Compounding involves the addition of interest to the initial amount. The higher is the compounding…
Q: um Brands has bonds maturing in 13 years and pay 6.5% on a $1000 par value. If the yield to maturity…
A: Time = t = 13 years Coupon rate = 6.5% Face value = fv = $1000 Yield to Maturity = r = 7% Coupon…
Q: Wendell's Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new…
A: The IRR is the investment discount rate that corresponds to the difference between the original…
Q: Calculate the APR of a loan for $9,875, including loan fees of $250, at 11.5% for 4 years. (Do not…
A: Data given: Loan amount=$9875 Rate=11.5% nper=4 Required: APR
Q: Given only the information provided, which bond would you suspect of having the lowest duration?…
A: Several bonds have been provided along with their characteristics. We have to spot the bond with the…
Q: A bank engaged in the foreign currency business is normally exposed to currency risk, but will also…
A: Business risk refers to the risk that effects the financial performance of the company by various…
Q: QUESTION 4 Account Type Checking - Variable Rate Money Market - Variable Rate Summer Cash - Variable…
A: a) Summer Cash - Variable Rate: APY = 1.00% (round to 2-decimal point in percent) b) Money Market…
Q: How do successive balance sheets and the income statements determine cash inflows and outflows for a…
A: The information contained in successive balance sheets and income statements is useful for analyzing…
Q: A B C 1 Balance Sheet: Assets (Millions of Dollars) 2 3 Assets (million $) 4 Cash 5 S-T investment 6…
A: Financial statements are available for two successive years. % change in the value of each of the…
Q: (Click on the following icon in order to copy its contents into a spreadsheet.) Original Cost…
A: The dollar profit/loss on investment can be calculated using the formula: Profit/Loss=Selling price…
Q: Retained earnings versus new common stock Using the data for a firm shown in the following table,…
A: Current market price per share = $45 Dividend growth rate = 6% Projected dividend per share next…
Q: Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two…
A: Note: No information such as depreciation and cost of capital on the project is provided, Net Income…
Q: At the time of the initiating the contract, the price of a stock is $65. A trader sells 5 naked put…
A: The net gain (loss) from a short position in 5 put contracts has to be determined. Each put contract…
Q: A debt of $36,000 is repaid over 12 years with payments occurring monthly. Interest is 12%…
A: A loan is a contract between two entities where one forwards a fixed sum of money to the other in…
Q: Explain the connection between the ethical responsibility of the Banking industry and the management…
A: Banks and financial institutions have an ethical responsibility towards its different stakeholders.…
Q: A company has two investment opportunities. Alternative 1 (Alt. 1) pays $9,000 (inflow) two years…
A: The question is based on the concept of time value of money. Two alternatives of cash inflows have…
Q: Defense Systems Inc. has convertible bonds outstanding that are callable at $1,040. The bonds are…
A: Convertible Bonds: An interest-bearing fixed-income corporate financial asset known as a convertible…
Q: Ford Motor company is offering the following deals: 0% APR for 60 months or a $4,000 rebate. the…
A: Rebate = $4000 Interest rate = 3.6% Purchase price = $28,750 Loan period = 60 months
Q: analyze and discuss the following factors on a European call option: time to expiration, exercise…
A: An option is a type of financial instrument that is based on the value of underlying securities,…
Q: An investment will pay you $100,000 in 10 years. If the appropriate discount rate is 6 percent…
A: Future value = fv = $100,000 Time = t = 10 * 365 = 3650 days discount rate = r = (1 + (0.06 / 365))…
Q: describe the process of short selling. define the theoretical fair value of an asset and relate…
A: The stock market is a platform where publicly traded companies can raise funds by selling ownership…
Q: Gunnar Corp uses no debt. The weighted average cost of capital is 9 percent. If the current market…
A: Weighted average cost of capital is the weighted average of the costs of different sources of…
Q: Tulsa Drilling Company has $1.8 million in 10 percent convertible bonds outstanding. Each bond has a…
A: The rate of return refers to the minimum return attained by the investments over the investments…
Q: Using the "enterprise method", calculate the value of the entire business. You can assume a 35% tax…
A: EBIT indicator is helpful for analysts and investors to assess a company's operating performance…
Q: u have decided to refinance your mortgage. You plan to borrow whatever is outstanding on your…
A: In case of a mortgage loan, a series of equal fixed periodic payment at equal interval over a…
Q: Define the terms, or give short explanations. -dollar return -equilibrium -financial…
A: 1. Dollar return is the real profit or loss an investment makes over a specific time period, given…
Q: why is political stability is one of the factor of foreign exchange market
A: The foreign exchange market, also known as the forex market or FX market, is a decentralized market…
Q: Paul and Marie Weir moved from a community property state to a common law property state last year.…
A: Property acquired by one member of a married couple is owned entirely and alone by that individual…
Q: Sophie borrows $ 10,000 at an annual effective interest rate of 12% and will repay the loan over 10…
A: Compound = monthly = 12 Present value = pv = $10,000 Interest rate = r = 12 / 12 = 1% Time = t = 10…
Q: Phone, Inc, has an equity multiplier of 136, total asset turnover of 165, and a profit margin of 8…
A: Dupont formula is that formula which is used for calculating return on equity of the business. This…
Q: For problems 15-18, Find the (a) down payment and (b) amount financed 15. Lawrence Huber purchased…
A: The advance cash payment made by the buyer for an estate's down payment and other substantial…
Q: An issue of common stock is selling for $58.20. The year-end dividend is expected to be $2.55,…
A: Given information: Current stock price = $58.20 Dividend (year-end) = $2.55 Dividend Growth Rate =…
Q: Forecasting Profits As a result of increasing energy costs, the growth rate of the profit of a…
A: The forecasting is said to be a major area of Finance which deals with uncertainty and the risk is…
Q: Edwards Construction currently has debt outstanding with a market value of $75,000. The company has…
A: Here, Market Value of Debt is $75,000 WACC is 10% EBIT of Previous year is $8750 Growth Rate is 7%
Q: Look at the cash flows for projects F and G given below. Cash Flows ($) Project Co F G Project F…
A: NPV stands for Net Present Value, which is a financial measure that compares the present value of…
Q: In 2022, the CEO of Crimson, Inc., entertains 17 clients at a skybox in Memorial Stadium for a…
A: Deduction: 100% of business meal purchased from a restaurant is deductible. Entertainment expenses…
Q: (3) Mr. Brown who is a British travelling in USA now, and he bought a house in Hawaii with price of…
A: Mr. Brown's home currency is GBP. To buy the house in US, he needs to sell GBP and buy USD. To buy…
Q: The Covid-19 pandemic has had what effects on the health care sector utilization and spending? It…
A: The Covid-19 pandemic initially caused a reduction in overall health care utilization and spending…
Q: Evaluate these three technologies used to obtain energy and atmosphere credits towards LEED…
A: investors use NPV to make informed decisions about which investments to pursue and which ones to…
Q: Item 7 Camcorder 8 9 Family Vacation Used Truck 10 Dining Rm Set 11 Office Equipment 12 Cruise…
A: When an individual purchases an item and if, he makes some partial payment of the total payment,…
Q: If a property has an OER of 42% and a net operating income (NOI) of $49,500, what is the EGI?…
A: OER stands for Operating Expenses ratio. It represent the Operating expenses ratio in sales value.…
Q: 2. An automobile GPS system is sold to stores at a wholesale price of $97. A popular store sells…
A: The wholesale price and the retail price are linked through mark up and mark up percentages. In all…
Q: Year Cash Flow (A) Cash Flow (B) 0 -$52,000 -$52,000 1 28,000 2 22,000 3 17,000 4 12,400 a-1. What…
A: You have specifically asked for help in parts c-1, c-2 and d. The solution focuses on these sub…
Answer question no workings required
Step by step
Solved in 3 steps
- LMNOP Corporation uses no debt. The weighted average cost of capital is 9.2 percent. If the current market value of the equity is $31.7 million and there are no taxes, what is EBIT? Round to the nearest dollar and format as "X,XXX,XXX"Wako and Sons Inc. has no debt, a WACC of 14% and a tax rate of 40%. If the company chooses to change its capital structure to a debt equity ratio of 40% (D/E=0.4), what is the new cost of equity RE? a. 17.4% b. 22.4% c. 19.0% d. 19.6% e. None of the above.Horford Co. has no debt. Its cost of capital is 10 percent. Suppose the company converts to a debt-equity ratio of 1. The interest rate on the debt is 7.1 percent. Ignore taxes for this problem. a.What is the company’s new cost of equity? b.What is its new WACC?
- Gunnar Corp uses no debt. The weighted average cost of capital is 9 percent. If the current market value of the equity is $37 million and there are no taxes, what is the cost of equity for this corporation? 1000 O 6% O 8% O 7% ○ 9%Thrice Corp. uses no debt. The weighted average cost of capital is 4.8 percent. If the current market value of the equity is $23 million and there are no taxes, what is EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)Take It All Away has a cost of equity of 10.45 percent, a pretax cost of debt of 5.21 percent, and a tax rate of 21 percent. The company's capital structure consists of 65 percent debt on a book value basis, but debt is 25 percent of the company's value on a market value basis. What is the company's WACC? Multiple Choice ● O O O 9.14% 8.17% 12.39% 9.75% 8.87%
- Horford Co. has no debt. Its cost of capital is 9.5 percent. Suppose the company converts to a debt-equity ratio of 1. The interest rate on the debt is 6.6 percent. Ignore taxes for this problem. a. What is the company’s new cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)b. What is its new WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Sugar Skull Corporation uses no debt. The weighted average cost of capital is 8 percent. If the current market value of the equity is $13 million and there are no taxes, what is EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) What is the EBITTake It All Away has a cost of equity of 10.75 percent, a pretax cost of debt of 5.41 percent, and a tax rate of 39 percent. The company's capital structure consists of 75 percent debt on a book value basis, but debt is 35 percent of the company's value on a market value basis. What is the company's WACC? Multiple Choice 10.90% 9.47% 8.14% 8.88% 6.65%
- Shadow Corp. has no debt but can borrow at 7.9 percent. The firm's WACC is currently 9.7 percent, and the tax rate is 23 percent. a. c. What is the firm's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the firm converts to 35 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) If the firm converts to 50 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-1. If the firm converts to 35 percent debt, what will the company's WACC be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-2. If the firm converts to 50 percent debt, what will the company's WACC be? (Do not round intermediate calculations and…12 The Border Cafe has a cost of equity of 13.2 percent and a pretax cost of debt of 7.5 percent. The debt-equity ratio is 0.6 and the tax rate is 35 percent. What is the unlevered cost of capital?Once Bitten Corp. uses no debt. The weighted average cost of capital is 5.2 percent, and the company's EBIT is expected to be a constant amount in perpetuity. The current market value of the equity is $20 million and the corporate tax rate is 35 percent. What is the company's EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to 2 decimal places, e.g., 32.16.) EBIT