Chapter 9 - Homework 6 Template

I need D and E.

Destin Company Information: Total Assets $940,000 Total Liabilities $600,000 Cost of debt 5.8% Risk-free rate 1.97% Beta 0.89 Market Return 10%   A) Using CAPM, what is cost of equity? (so you are not confused, the opportunity cost of using equity is the return we were expecting to receive on the equity).  a)8.03% b)7.77% c) 9.12% d) 8.9% B) What is Destin's Weighted Average Cost of Capital? a) 6.22% b) 5.89% c) 6.07% d) 5.72%

M... Levered Beta Market Value of Equity Market Value of Debt: Cash Marginal Tax Rate Firm A 1.50 $2.4 million $600 million $50 million 37% Firm B 1.25 $1.0 billion $200 million $75 million 37% 2b. Compute the unlettered beta corrected for cash for each firm (show work). 2c. Using the unlettered beta for corrected for cash, calculate the unlevered beta of Firm A after the acquisition (show work) 2d. Firm A borrowed $1.0 billion and assumed Firm B's debt. Compute the levered beta of Firm A after the acquisition.

Do not use ai

The following data refers to Company Z: -      Beta = 1.7 -      Required return on debt (yield to maturity on a long term bond) = 3.1% -      Tax rate = 21% -      30-year government bond = 2.3% -      Market risk premium can be assumed to be 5%   Estimate the cost of capital (WACC) for Company Z.

How do I calculate "Cost of equity", "Discount rate (WACC)", and "growth rate"?

Provide correct answer financial accounting

Consider the following average annual returns: Average Return 23.5% 13.1% 7.5% 6.8% 4% Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 1.8% OB. 0% OC. 7% OD. 3.5%

Answer the following questions given the information below: Equity Information 40 million shares $100 per share Beta = 1.15 Market risk premium = 8% Risk-free rate = 3%   Debt Information $1 billion in outstanding debt (face value) YTM = 9%   What is the cost of equity? What is the cost of debt? What is the after-tax cost of debt? What are the capital structure weights? What is the WACC?

What is the price per share based on the equity free cash flow model? Year 1: Revenue: 630 Fixed costs: 120 Variable costs: 200 Additional investments in NWC: 10 Additional investments in operating long-term assets: 70 Depreciation: 60 Interest expenses: 35 Newly issued debt: 25 Principal repayment: 15 Cost of equity, Rs: 0.14 Corporate tax rate: 0.40 Growth rate per year: From year 1 through year 5: 0.12 After year 5: 0.05 Market value: Short-term debt: 100 Long-term debt: 600 Common Stock: Market price per share: 18 Number of shares: 100 Select one: a. $16.39 O b. $14.21 O c. $13.09 O d. $15.33 Time left 0:04:22

(1) What is the market interest rate on Coleman's debt and its component cost of debt? Coupon rate Coupons per year Years to maturity Price Face value Tax rate N PV PMT FV rd rd (1-T) Nominal dividend rate Dividends per year Par value Price 12% 2 15 (2) What is the firm's cost of preferred stock? rp $1,153.72 $1,000 25% 10% 4 $100 $111.10

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Given the following information, find the WACC for Spencer's Book Shop. preferred; 60% common equity Target capital structure Market value per share, common. $25.00 Market value per share, preferred. $20.00 Last annual dividend (Do), common $2.50 Annual Dividend preferred. $2.00 Dividend growth rate (g) 5% Marginal tax rate 40% Yield to maturity on outstanding bonds 9% 30% debt; For this problem, assume that floatation costs for common, preferred, and debt are all zero. O 11.50% O 11.62% O 11.92% O 12.95% e, 13.00%