Aceline Corp is currently all equity financed. Cost of capital is 15% and firm value is 10 million. The company is considering a 4 million debt issue and 8% interest rate. Money is to repurchase shares. Marginal tax rate is 35%. According to m and m proposition what is Acelines return on equity after the debt issue?

Q: Zera Manufacturing is interested in measuring its overall cost of capital. The firm is in the 40%…

A: Face value of the bond (F) = RM 1000 Coupon (C) = 10% of 1000 = RM 100 n = 10 years Let r = YTM of…

Q: 1. SodaFizz has debt outstanding that has a market value of $3 million. The company's stock has a…

A: Given, The market value of debt is $3 million The market value of equity is $6 million.

Q: Q3) Tanten Company has 200% debt and 80% equity. The borrowing rate is 12%. A.  If you own 4% of…

A: "Since you have posted a question with multiple sub-parts, we have solved the first three for you.…

Q: The Global Advertising Company has a tax rate of 30%. The company can raise debt at a 12% interest…

A: Cost of Equity = [(Dividend x (1 - Flotation Cost)) / (Current Stock Price x (1 - Flotation Cost))]…

Q: An unlevered firm has expected earnings of $4,780,000 and a market value of equity of $56,478,000.…

A: Cost of equity will be based on earnings of the company. If debt is issued, the company pays…

Q: Am. 205.

A: I'd be glad to help you with the Restex valuation problem, but there seems to be a discrepancy in…

Q: Currently Forever Flowers Inc. has a capital structure. consisting of 25% debt and 75 y, equity.…

A: The WACC of a company is the average return that the company provides to all its stakeholders. It is…

Q: Dewer International has an unlevered cost of capital of 10%, a tax rate of 35%, and expected…

A: Given information:Unlevered cost of capital (ru​) = 10%Tax rate (Tc​) = 35%Cost of debt (rd​) =…

Q: Start - Up Industries is a new firm that has raised $210 million by selling shares of stock.…

A: Market value to book value ratio refers to the ratio which shows the comparison between the market…

Q: Vienna Inc. currently has a capital structure that consists of 100% equity. The risk-free rate is…

A: Risk-free rate = 3%Market risk premium = 8%Current cost of equity  9%Tax rate = 30%New weight of…

Q: Tech Corp had gross sales of $9 million and total ex- penses of $8.5 million. Assume that Tech wants…

A: Sales = 9,000,000 Expenses = 8,500,000 Capital Investment = 1,000,000   Minimum amount of bonds to…

Q: A firm is currently an all equity firm that has an annualprojectedEBIT of $112,230. The current cost…

A: EBIT (Earnings before interest and tax)= $112,230.Current cost of equity =16.5%Tax rate = 20%.Debt…

Q: Am.204.

A: a) Finding the Expected Future Growth RateWe can use the Constant Growth Dividend Discount Model…

Q: National Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity…

A: According to Residual Theory, Dividend decision has no effect on the wealth of the shareholder…

Q: You are tasked to see how debt financing impacts equity required return for SBC Inc. The unlevered…

A: 1. D/E ratio = 2. Value of firm = Value of debt + value of equity.3.  Levered beta =

Q: Snow Flake Inc is currently all equity financed. The company decides to recapitalize to take…

A: Debt-to-equity ratio:The Debt to debt-capital ratio is a financial metric that evaluates the…

Q: Tomorrow Co is financed entirely by equity that is priced to offer a 14% expected return on equity.…

A: r[E] = r[A] + Debt /Equity * ( r[A] -r[D] )

Q: Walmart (WMT) is currently all-equity financed, its equity rate of return is 15%. Walmart expects…

A: New cost of equity = Ku+ D/E*(Ku-Kd)Where Ku = Unlevered cost of equity KD= cost of debt

Q: A company currently has cost of equity of 13.0% and cost of debt of 5.0%. Its WACC is 6.2%. What…

A: In determining the optimal financing strategy for corporate growth, it is essential to consider the…

Q: 1.4) A firm's stockholders expect a 15% rate of return, and there is $12M in common stock and…

A: The weighted average cost of capital (WACC) is the firm's average after-tax cost of capital from all…

Q: Finance, Inc. has equity with a market value of $30 million and debt with a market value of $15…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: NEKO Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity…

A: Debt to equity ratio = 25% Funding amount = P 600000

Q: S Corp. is expected to pay a $2.55 dividend at year end, the dividend is expected to grow at a…

A: Weighted Average Cost of Capital (WACC) = (Weight of Equity x  Cost of Equity) + (Weight of debt x…

Q: Gaucho Services starts life with all-equity financing and a cost of equity of 13%. Suppose it…

A: WACC is also known as Weighted Average Cost of Capital. It includes the cost of debt, cost of equity…

Q: Referring to table below, calculate the market value of firm L (without a corporate income tax) if…

A: The Modigliani - Miller Proposition: Modigliani-Miller proposition 1 states that a firm market value…

Q: QA) Tanten Company has 200% debt and 80% equity. The borrowing rate is 12%. (1) If you own 4% of…

A: (Note: Debt is 20% and equity is 80%) First we'll calculate the net income by deducting interest on…

Q: Empire Electric Company (EEC) uses only debt and common equity. It can borrowunlimited amounts at an…

A: a. Calculation of the Ke (cost of common equity) is shown below:   Hence, the Ke is 14.97%.

Q: NEKO Inc. has forecasted that its net income will be P400,000. The company has debt ratio of 30%.…

A: Net income (NI) = P400,000 Debt ratio = 30% Equity ratio (ER) = 100%-30% = 70% Investment…

Q: a. What is Forever's current WACC? Round your answer to two decimal places. 11.55 O % b. What is the…

A: WACC: It is the computation of company’s cost of equity by giving weights to the sources of capital

Q: What will be the cost of equity after the repurchase?

A: Cost of Equity: It represents the cost of the issuer for raising equity capital from the investors.…

Q: Gaucho Services starts life with all-equity financing and a cost of equity of 15%. Suppose it…

A: WACC means weighted-average cost of capital.It is computed as follows:-WACC =…

Q: National Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity…

A: debt-to-equity ratio of 25% means that for every one 1P invested in the company, about 25% come…

Q: GRK Co. is currently an all-equity firm with an expected return of 10%. The expected EBIT is $…

A: The unlevered firm is the firm which contains only equity capital in its capital structure. The…

Q: Concatti Corporation hired your consulting firm to help them estimate the cost of equity.  The yield…

A: The formula used for computing the cost of equity using the bond Premium approach is shown:

Q: S Corp. is expected to pay a $2.55 dividend at year end, the dividend is expected to grow at a…

A: Cost of Equity(Ke) = (D1 / P0 ) + gwhereD1 = Expected dividend = $2.55P0 = Current share price =…

Q: Horford Co. has no debt. Its cost of capital is 10 percent. Suppose the company converts to a…

A: The overall cost of raising funds is known as the cost of capital. The cost of capital of a company…

Q: Bulldogs Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity…

A: Given Information :  Net Income = P520,000 Debt - Equity Ratio = 25% Cost of project = P600,000

Q: Need answer please

A: Calculating Net Income for Each PlanPlan I:Interest expense = $65,700 * 10% = $6,570Net income =…

Q: What is the value of this company?

A: We can determine the value of the company using the formula below: