SExamine the following book-value balance sheet for University Products Incorporated. The preferred stock currently sells for $15 pershare and pays a dividend of $3 a share. The common stock sells for $10 per share and has a beta of 0.9. There are 4 million commonshares outstanding. The market risk premium is 8%, the risk-free rate is 4%, and the firm's tax rate is 21%.AssetsCash and short-term securities $ 3.0Accounts receivable.3.0InventoriesPlant and equipmentTotal7.025.0$ 38.0a. Market debt-to-value ratiob. WACCBOOK-VALUE BALANCE SHEET(Figures in 5 millions)Liabilities and Net WorthBonds, coupon 5%, paid annually (maturity 10 years,current yield to maturity = 7%)Preferred stock (par value $20 per share)Common stock (par value $0.10)Additional paid-in stockholders' equityRetained earningsTotala. What is the market debt-to-value ratio of the firm?b. What is University's WACC?Note: For all the requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimalplaces.%$ 10.03.00.47.617.0$ 38.0%

Market Price per Preferred Stock = mpp = $15Dividend per Preferred Stock = dp = $3Market Price per…

Answered: Examine the following book-value…

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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Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,260 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,260 worth of stock. Ignore taxes. Liabilities and Assets Equity $ 7,200 Fixed assets 29,300 Debt $11,300 25,200 Cash Equity a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $25,500 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $25,500 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $25,500 a year, find the price-earnings ratio if the…
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Please provide assistance with the attached questions regarding Finance.
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The following financial information is available on Rawls Manufacturing Company: Current per share market price $48.00 Current per share dividend $3.50 Current per share earnings $6.00 Beta 1.1 Expected rate of return on market 12.0% Risk-free rate 6.0% Expected long-term growth rate 5.0% Rawls can issue new common stock to net the company $44 per share. Determine the cost of external equity capital using the dividend capitalization model approach. (Compute the answer to the nearest 0.1%.) a 12.6% b. 14.4% c.13.4% d.12.7%
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Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…

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