Compute the unlevered market (asset) beta for Whirlpool. Current Levered Market Beta-Unlevered Market Betax (1+(1-Income Tax Rate) x (Current Market Value of Debt/Current Market Value of Equity) a Total assets Interest-bearing debt Average pretax borrowing cost Common equity 1.44 Book value Market value Income tax rate Market equity beta Whirlpool $13,532 $ 2,597 6.1% Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $ 3,006 $ 2,959 35.0% 227

Compute the unlevered market (asset) beta for Whirlpool. Current Levered Market Beta-Unlevered Market Betax (1+(1-Income Tax Rate) x (Current Market Value of Debt/Current Market Value of Equity) a Total assets Interest-bearing debt Average pretax borrowing cost Common equity 1.44 Book value Market value Income tax rate Market equity beta Whirlpool $13,532 $ 2,597 6.1% Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $ 3,006 $ 2,959 35.0% 227

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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tivity 5 RATIO ANALYSIS Current Ratio · Understand the information provided by the current ratio. Identify the expected range and whether an increasing or decreasing trend is usually preferred. arpose: he current ratio compares current assets to current liabilities. This ratio measures the ability to pay current ebts. It is a measure of short-term liquidity. Current assets CURRENT RATIO = Current liabilities GAP INC 1/30/99 GENERAL MOTORS (GM). 12/31/98 ($ in 000s) HOM DΕΡΟΤ 1/31/99 ORACLE 5/31/99 Current assets $1,871,824 $44,363,000 $4,933,000 $5,447,274 $1,553,103 $47,806,000 $2,857,000 $3,046,423 Current liabilities Source: Disclosure, Inc., Compact D/SEC, 2000. 1. For each company listed above, compute the current ratio. Record your results below.. Current ratio: 1.21 2. The current ratios computed above åre primarily in the range (less than 1/1 through 3 / 3 through 5 / more than 5). 3. The company that has the strongest short-term liquidity as measured by the çurrent ratio is…
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%
AJ.2
Calculate Cost of Common Equity using CAPM (Capital Asset Pricing Model), DCF (Discounted Cash Flow Model) and Bond Yield Risk Premium CAPM data: VEC’s beta = 1.2 The yield on T-bonds = 3% Market risk premium = 7% DCF data: Stock price = $27.08 Last year’s dividend (D0) = $2.10 Expected dividend growth rate = 4% Bond-yield-plus-risk-premium data: Risk premium = 5.5% Amount of retained earnings available = $80,000 Floatation cost for newly issued shares = 7%
am. 123.
Chapter 11, Question 5
4) Calculate the WACC for a firm with the following data: Comparable Firms Firm A Firm B Firm C Risk Free Rate Expected Mkt Return Market Standard Deviation Industry Standard Deviation Most Recent Debt Rating Default Premium Firm's Debt/Equity Ratios Actual Target Firm's Marginal Tax Rate i) 10.075% Correlation Coefficients Market 0.67 0.89 0.77 3.80% 10.30% 17.00% 21.00% 6.50% 0.72 1.63 30% Industry 0.54 0.72 0.66 ii) 14.112% Past Returns Std Deviation iii) 38% 29% 42% 8.672% Tax D/E Rate 0.67 30% 0.29 40% 1.34 30% iv) 11.724%
what is the debt to equity ratio if the WACC is0.083 the cost of debt is 0.055 and the cost of equity is 0.15 what is the weight of debt what is the weight of equity
Question 26 Consider the following data: D1-$1.55: Po-$49.50. g-3.70% (constant), and F-2.00%. What is the cost of equity raised by selling new common vock? O a. 9.90% Ob.6.90% O c. 10.90% O d. 8.90% O e. 8.83%
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.
The Crane Products Co. currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,418.61 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $11 per share. The preferred shares pay an annual dividend of $1.20. Crane also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Crane is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy…
48 The Sunland Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,434.63 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $10 per share. The preferred shares pay an annual dividend of $1.20. Sunland also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Sunland is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen…

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