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A: Weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…
Q: A firm needs to raise $135 million to finance its expansion into new markets. The company will sale…
A: Amount required= $135 millionOffer price per share= $58Underwriter charges= 5%Required:Number of…
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A: In this we have to determine WACC after recapitalization that repurchase of shares.
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Q: nflower Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9…
A: WACC is the average cost cost of capital. Ir can be calculated WACC =weight of equity*cost of…
Q: KMS corporation has assets of $650 million, $130 million of which are cash. It has debt of $162.5…
A: Perpetuity is an annuity in which the periodic payments or receipts begin on a fixed date and…
Q: The company needs to raise $40 million to finance its expansion into new markets. The company will…
A: Offer Price per share = $30Spread = 12%Net price receivable = 30*(1-12%)= $26.40
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A: The price-earning ratio is a method that measures the prices of the stock to its earnings per share.…
Q: 7. An all-equity firm has 100 million shares outstanding and $100 million in cash. The firm expects…
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A: Given data; EBIT = $147,000 cost of equity = 14.6% tax rate = 21% debt value = $40,000
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Q: Ali Inc. expects to generate free-cash of $330000 per year forever. If the firm's cost of capital is…
A: Disclaimer: Since you have asked multiple questions, we will solve the first question for you. If…
Q: What will the WACC be after recapitalization?
A: WACC: It is the weighted average cost of capital of the corporation for raising various sources of…
Q: you want to buy a corporate bond that has a face value of 1000 for that pays coupon of 0.08 paid…
A: Current price of bond is the price which can be paid for purchase of the bond. It is also called…
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A: EBIT = $100000 Cost of debt (Rd) = 9% Cost of equity (Re) = 18% Tax rate (T) = 35% Debt amount =…
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: KMS corporation has assets of $650 million, $65 million of which are cash. It has debt of $216.7…
A: A Leverage ratio is a ratio which shows how much capital is in the form of Debt.
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A: Solution We are provided with the following information Expansion Cost = $ 1,500,000 Financing with…
Q: Ali Inc. expects to generate free-cash of $350000250000per year forever. If the firm's cost of…
A: The value of firm will be =free cash flow/cost of capital Market Value of common stock =value of…
Q: An all-equity firm has expected earnings of $14,200 and a market value of $82,271. The firm is…
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A: The increased financial leverage will increase EPS. Under the old capital structure, the interest…
Q: a. Covan has 8 million shares outstanding, $3 million in excess cash, and it has no debt. If its…
A: The value of cash available to a corporation after covering the costs of doing business is measured…
Q: a. What is your estimate of Terrapin’s (after-tax) Weighted Average Cost of Capital? b. Using…
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Q: Kohwe Corporation plans to issue equity to raise $50 million to finance a new investment. After…
A: As per the given information: Investment amount - $50 millionFree cash flows - $10 millionShares…
The firm is considering increasing its debt by $900,000, using the proceeds to buy back 90,000 shares of stock. what does buy back mean?
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- A firm needs to raise $135 million to finance its expansion into new markets. The company will sale new shares of equity via general cash offering to raise funds. If the offer price is $58 per share and the company's underwriter charge a spread of 5%, how many shares need to be sold?Suppose that you believe the fundamental value of Wal-Grey stock is about to rise from $50 to $100 because of its new management team. You have $20,000 that you can risk in the market, and you can think of four possible ways to profit: a)use your $20,000 to buy shares of Wal-Grey b)borrow (at a 6% interest rate) an additional $20,000 on margin to buy a total of $40,000 worth of Wal-Grey stock c) enter into a futures contract to buy 400 shares of Wal-Grey in one year for $21,200 (you can invest safetly for a year at a 6% interest rate) d)buy a call option (for every $1000 you spend on call options, you have the right to buy 100 shares of Wal-Grey at the current price of $50 per share.) Calculate how much you earn or lose by each method if: (i) Wal-Grey stock rises to $100 per share in one year.The company needs to raise $40 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $30 per share and the company's underwriters charge 12 percent spread, how many shares need to be sold?
- Ali Inc. expects to generate free-cash of $330000 per year forever. If the firm's cost of capital is 0.17 percent, the firm cost of equity capital is 0.19 the market value of debt is $320000, the market value of preferred stock is $170000, and the company has 100000 shares of stock outstanding. What is the value of Ali's stock? what is the value of the firm what is the value of the c.s? Question 2 Not yet answered Marked out of 2.00 Flag question The variance of stock A is 0.0077 and the return is 0.115 while B has the same return but 0.2 as standard deviation what is the coefficient of variation for stock A what is the coefficient of variation for stock bA company currently has EBIT of $25,000 and is all-equity financed. The company expect EBIT to stay at this level indefinitely. Now assume the firm issues $50,000 of debt paying interest of 6% per year, using the proceeds to retire equity. The debt is expected to be permanent. What will happen to the total value of the firm? Make a case for why X is the best option and explain what considered, what assumptions you made and why?Scabiosa Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9 percent. The firm currently has no debt, and its cost of equity is 18 percent. The tax rate is 35 percent. The firm will borrow $80,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?
- A company’s common stock is currently selling at $40 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend will grow at 10% per year in the foreseeable future. What is the company’s equity cost of retained earnings? If the company sells new common stock to finance new projects and most pay $2 per share in flotation costs, what is the cost of equity? Be sure to include your work for all calculations.KMS corporation has assets of $650 million, $130 million of which are cash. It has debt of $162.5 million. Suppose that KMS decides to initiate a dividend, but it wants the present value of payout to be $65 million. If its cost of equity capital is 10.7%, to what amount per year in perpetuity should it commit (assuming perfect capital market)? KMS should commit to $ million per year. (Round to two decimal places.)An all-equity firm has expected earnings of $14,200 and a market value of $82,271. The firm is planning to issue $15,000 of debt at 6.3 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?
- Sunflower Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9 percent. The firm currently has no debt, and its cost of equity is 18 percent. The tax rate is 35 percent. The firm will borrow $80,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?Crocas Company Limited expects its EBIT to be $100,000 every year forever. The firm can borrow at 9 percent. The firm currently has no debt, and its cost of equity is 18 percent. The tax rate is 35 percent. The firm will borrow $80,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?Kohwe Corporation plans to issue equity to raise $50 million to finance a new investment. After making the investment, Kohwe expects to earn free cash flows of $10 million each year. Kohwe currently has 5 million shares outstanding, and has no other assets or opportunities. Suppose the appropriate discount rate for Kohwe's future free cash flows is 8%, and the only capital market imperfections are corporate taxes and financial distress costs. a. What is the NPV of Kohwe's investment? b. What is Kohwe's share price today? Suppose Kohwe borrows the $50 million instead. The finn will pay interest only on this loan each year, and maintain an outstanding balance of $40 million on the loan. Suppose that Kohwe's corporate tax rate is 35%, and expected free cash flows are still $9 million each year. c. What is Kohwe's share price today if the investment is financed with debt? Now suppose that with leverage, Kohwe's expected free cash flows wiH decline to $8 million per year due…