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On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $20 million in new projects. The firm's
Debt | $30,000,000 |
Common equity | 30,000,000 |
Total capital | $60,000,000 |
New bonds will have a 10% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required
- In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Round your answer to the nearest dollar.
$
- Assuming there is sufficient cash flow for Tysseland to maintain its target capital structure without issuing additional shares of equity, what is its WACC? Round your answer to two decimal places.
%
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- On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $30 million in new projects. The firm’s present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt. Debt $30,000,000 Common Equity 30,000,000 Total Capital $60,000,000 New bonds will have an 8 percent coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. Stockholders required rate of return is estimated to be 12 percent, consisting of a dividend yield of 4 percent and an expected constant growth rate of 8 percent. The marginal corporate tax rate is 40 percent. Assume that there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares of equity. What is the WACC?On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $25 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have an 9% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so $1.20/$30 = 4%.) The marginal corporate tax rate is 35%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet In order to maintain the present capital structure, how much of the…On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $30 million in new projects. The firm's present market value capital structure, here below, is considered to be optimal. There is no short-term debt. Debt Common equity Total capital $30,000,000 30,000,000 $60,000,000 New bonds will have a 9% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4%.) The marginal tax rate is 25%. a. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Round your answer to the nearest dollar. $ b. Assuming there is sufficient cash flow for Tysseland to maintain its target capital structure without…
- On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $30 million in new projects. The firm’s present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capita l $60,000,000 New bonds will have an 8% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. Stockholders’ required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so $1.20/$30 4%.) The marginal corporate tax rate is 40%. a. To maintain the present capital structure, how much of the new investment must be financed by common equity? b. Assume that there is sufficient cash flow such that Tysseland can maintain its target capital structure without issuing additional shares…On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $10 million in new projects. The firm's present market value capital structure, here below, is considered to be optimal. There is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have an 9% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4%.) The marginal tax rate is 40%. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Write out your answers completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. $…On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $15 million in new projects. The firm's present market value capital structure, here below, is considered to be optimal. There is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have an 8% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4%.) The marginal tax rate is 25%. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Round your answer to the nearest dollar. $ Assuming there is sufficient cash flow for Tysseland to maintain its target capital…
- On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $30 million in new projects. The firm’s present market value capital structure, shown below, is considered to be optimal. There is no short-term debt. Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have an 8% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders’ required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4 %.) The marginal tax rate is 40%. a. In order to maintain the present capital structure, how much of the new investment must be financed by common equity? b. Assuming there is sufficient cash flow for Tysseland to maintain its target capital structure without issuing additional shares of…On January 1, 2009 the total assets of the Shipley Company were $ 180 million. During the year, the company plans to raise and invest $ 90 million. The firm's present capital structure is considered optimal.Assume that there is no short term debt. Long term debt 90,000,000 Common Equity 90, 000, 000 Total Liabilities and Equity 180,000,000 Project B Cash flow (2000) New bonds will have a coupon rate of 10% and will sell at par. Common stock, currently selling at $ 40 a share can be sold to net the company at$36 a share. Stockholders' required rate of return is 12%. (The next expected dividend is $1.60). Retained earnings are estimated to be $9 million. The tax rate is 40%. a. To maintain the present capital structure, how much of the capital budget must Shipley finance by equity? b. How much of the new equity funds needed must be generated internally?Externally? c. Calculate the cost of each of the equity components. d. Calculate the weighted average cost of capital.ABC Inc. has a the capital structure shown below. Liabilities Stockholders' Equity $122,099,000 $95,228,000 ABC Inc. will raise additional capital for new projects this year, in the amount of $44,978,000. The firm believes, however, that a capital structure with 56.25% debt is ideal. The firm will be able to issue new discount bonds at a price of $909 with a yield-to-maturity of 3%. Assuming they want to change their capital structure to the new target, how many new bonds will the firm need to issue? unur answer to the nearest bond.
- A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Debt: The firm can obtain a 5-year loan from Colorful Bank for $2,500,000, at an annual rate of 10%. Preferred Stock: The firm has determined it can issue $100 par value preferred stock at $103 per share for a total of $3,500,000. The stock will pay a 10% annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $150 per share. The dividend expected to be paid at the end of the coming year is $15. Its dividend payments have been growing at a constant rate of 5%, total common stock is $4,000,000. Additionally, the firm’s marginal tax rate is 30 percent. The firm is currently studying the feasibility of investing in a machine worth $6,000,000 which will reduce cash operating costs for $2,600,000 yearly, it will have a 3-year life and will be depreciated on a straight-line…A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Debt: The firm can obtain a 5-year loan from Colorful Bank for $2,500,000, at an annual rate of 10%. Preferred Stock: The firm has determined it can issue $100 par value preferred stock at $103 per share for a total of $3,500,000. The stock will pay a 10% annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $150 per share. The dividend expected to be paid at the end of the coming year is $15. Its dividend payments have been growing at a constant rate of 5%, total common stock is $4,000,000. Additionally, the firm’s marginal tax rate is 30 percent. The firm is currently studying the feasibility of investing in a machine worth $6,000,000 which will reduce cash operating costs for $2,600,000 yearly, it will have a 3-year life and will be depreciated on a straight-line…A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Debt: The firm can obtain a 5-year loan from Colorful Bank for $2,500,000, at an annual rate of 10%. Preferred Stock: The firm has determined it can issue $100 par value preferred stock at $103 per share for a total of $3,500,000. The stock will pay a 10% annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $150 per share. The dividend expected to be paid at the end of the coming year is $15. Its dividend payments have been growing at a constant rate of 5%, total common stock is $4,000,000. Additionally, the firm’s marginal tax rate is 30 percent. The firm is currently studying the feasibility of investing in a machine worth $6,000,000 which will reduce cash operating costs for $2,600,000 yearly, it will have a 3-year life and will be depreciated on a straight-line…
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