?? Galaxy Enterprises in 2024 has long-term debt of $50 million at an average interest rate of 8%.Its market capitalization is $60 million. The tax rate is 42%, and the cost of equity is 12%. Thecompany also has a new car worth $30,000 and a painting worth $700,000. Determine theWACC. Calculate the after-tax cost of debt for the Crestview Clinic, given:• The coupon rate on its debt is 8 percent.• The tax rate is 35 percent.•Crestview Clinic also has annual software expenses of $2,000 and recently completed abuilding renovation costing $100,000.

Steps for WACC Calculation for Galaxy Enterprises: Step 1: Identify the given values:• Market value…

Answered: Galaxy Enterprises in 2024 has…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 24P

See similar textbooks

Similar questions

Please answer the following showing detailed working: Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 31 percent. Given the above information; a) Complete the table given below for varying levels of debt below by using a mix of the given information and using your own computations. EBIT $100,000.00 Cost of debts 11% cost of equity when unlevered 18% Tax rate 31% Debts $0 $10,000.00 $20,000.00 $30,000.00 Cost of Equity when levered Equity D/E Vu VL WACC b) Plot the results from the table into the following two graphs:i) Value of the firm vis-à-vis- Total debtii) Cost of capital of the firm vis-à-vis D/E ratio.iii) Which MM propositions have you demonstrated?
You want to purchase an office building in Brooklyn that is expected to generate $475554 net operating income (NOI) in the following year. You decide you want to take out a loan to finance the purchase of this property. It will be an IO loan at a rate of 6.82%, compounded annually, with annual payments. The lender will provide financing up to a minimum Debt Service Coverage Ratio (DSCR) of 1.2 based off the next year's NOI. What is the largest loan amount the lender will allow you to take based on the DSCR requirement? State your answer as a number rounded to the nearest cent (e.g. if you get $13.57654, write 13.58)
(Ignore income taxes in this problem.) Your Company is considering an investment proposal in which a working capital investment of $45,000 would be required. The investment would provide cash inflows of $5,000 per year for seven years. The company's discount rate is 8%. What is the investment's net present value? a- $4,115 b- $3,530 c- $7,265 d- $5,645
You are planning to issue debt to finance a new project. The project will require $19.95 million in financing and you estimate its NPV to be $14.083 million. The issue costs for the debt will be 2.6% of face value. Taking into account the costs of external financing, what is the NPV of the project? The new NPV will be $ (Round to the nearest dollar.)
(Ignore income taxes in this problem.) Your Company is considering an investment proposal in which a working capital investment of S70,000 would be required. The investment would provide cash inflows of $7,500 per year for seven years. The company's discount rate is 10%. What is the investment's net present value? O S1,510 O $2,703 O $4,800 O $2,420
Wal-Mart plans to open a new store near Campus. Wal-Mart is going to finance via bond market and stock market. Total capital required is 10 million dollars. 7 million dollars are going to be borrowed from the bond market. This 3% annual coupon bond is traded in the market for $950 and is going to be matured in 10 years. Flotation fee is 7% of the price of the bond. Tax rate is 40%. How much is the cost of debt of Wal-Mart? （Hint: This is an annual coupon bond, not a semi-annual coupon bond） 68% 75% 57% 81%
A home worth $ 1,000,000.00 will have a 70% loan at an annual mortgage rate of 8%, with the remaining30% equity. What must the net operating income (NOl) be in order to generate a 12 per cent cash oncash return?Select the correct response:$700,000.00$120.000.00$92.000.00$84.000.00$56.000.00
You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10 million face value of 10-year debt. You have the following data for each: • A public issue. The interest rate on the debt would be 8.5%, and the debt would be issued at face value. The underwriting spread would be 1.5%, and other expenses would be $80,000. A private placement. The interest rate on the private placement would be 9% , but the total issuing expenses would be only $30,000 a-1. Calculate the net proceeds from public issue. Note: Enter your answer in dollars not millions of dollars. a-2. Calculate the net proceeds from private placement. Note: Enter your answer in dollars not millions of dollars. b-1. Calculate the Present Value of the extra interest on the private placement. Note: Do not round intermediate calculations. Enter your answer in dollars not millions of dollars. Round your answer to the nearest whole dollar amount. b-2. Other things being…
You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.9 million face value of 10-year debt. You have the following data for each: A public issue: The interest rate on the debt would be 8.95%, and the debt would be issued at face value. The underwriting spread would be 1.59%, and other expenses would be $89,000. A private placement: The interest rate on the private placement would be 9.9%, but the total issuing expenses would be only $39,000. Is it possible to get these calculations in Excel a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement.
You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.4 million face value of 10-year debt. You have the following data for each: A public issue: The interest rate on the debt would be 8.7%, and the debt would be issued at face value. The underwriting spread would be 1.54%, and other expenses would be $84,000. A private placement: The interest rate on the private placement would be 9.4%, but the total issuing expenses would be only $34,000. Required: a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement. b-2. Other things being equal, which is the better deal?
You plan to issue $15 million in 270 day commercial paper into a market that should be happy to invest in your company. If issue costs are $60,000 and you discount at 5%, what is your cost of borrowing to you?
Please only answer 12-15

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS