XYZ company issued new securities to finance a new TV show. The project cost 500000and debt-to-equity ratio is 0.9 the flotation cost is 0.06for the equity and the flotation cost for debt is 0.02 if you want to raise money from equity and debt, what is the total flotation cost for the firm? what is the total amount to be raised? if you want to raise money from equity and debt, what is the total flotation cost for the firm? what is the total amount to be raised?

XYZ company issued new securities to finance a new TV show. The project cost 500000and debt-to-equity ratio is 0.9 the flotation cost is 0.06for the equity and the flotation cost for debt is 0.02 if you want to raise money from equity and debt, what is the total flotation cost for the firm? what is the total amount to be raised? if you want to raise money from equity and debt, what is the total flotation cost for the firm? what is the total amount to be raised?

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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The Sprite Toy Company needs to raise funds for a major expansion of its manufacturing operations. Sprite has determined that it will issue $100 millionof financing, but it has not decided whether to issue debt or equity. The companyis publicly traded.a. Based on the information given in Table 3-3, compute the flotation costs thatSprite would incur if it raises the needed funds by issuing equity only.b. Based on the information given in Table 3-3, compute the flotation costs thatSprite would incur if it raises the needed funds by issuing straight debt only.c. If Sprite wants to keep its flotation costs low, which form of financingshould it use? Discuss some factors other than flotation costs that thecompany should consider. TABLE 3-3 Flotation (Issuance) Costs for Issuing Debt and EquityaIssue Size Bondsb Equityc($ millions) Straight Convertible Seasoned Issues IPOsUnder…
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WACC. Grey's Pharmaceuticals has a new project that will require funding of $7.3 million. The company has decided to pursue an all-debt scenario. Grey's has made agreements with four lenders for the needed financing. These lenders will advance the following amounts at the interest rates shown: Click on the Icon D in order to copy its content into a spreadsheet. Lender Amount Interest Rate Steven $2,555,146 12% Yang $2,095,642 11% Shepherd $1,778,883 8% Bailey $870,329 9% What is the weighted average cost of capital for the $7,300,000? % (Round to two decimal places.)
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Dollar General (DG) is choosing between financing itself with only equity or with debt and equity. Regardless of how it finances itself, the EBIT for DG will be $545.63 million. If DG does use debt, the interest expense will be $57.85 million. If DG‘s corporate tax rate is 0.30, how much will DG pay (in millions) in total to ALL investors if it uses both debt and equity? Instruction: Type ONLY your numerical answer in the unit of millions
Handley Ltd is a firm that up until now has been involved in the manufacturing of plastic bottles used by milk distributors. It is considering pivoting towards producing wifi-enabled lighting systems and wants your help to estimate its after-tax weighted average cost of capital in order to assess the viability of this strategy.Handley Ltd currently have a debt-to-equity ratio of 0.6. They also have two sources of debt, commercial bills and long-term bonds, which, in aggregate, are each equivalent in market value to each other. The current yield on the commercial bills is 3.7% p.a. and the yield on the bonds is 4.1% p.a. The risk-free interest rate is estimated to be 3% p.a., the market risk premium 5.5% p.a. and the current beta of Handley Ltd shares is 0.7. The relevant corporate tax rate is 30%. 1. Estimate the after-tax WACC of Handley Ltd (in percentage terms to two decimal places e.g. 10.03%) 2. In no more than 3 lines explain whether it is appropriate for the company to use its…
The liabilities and owners’ equity for Campbell Industries is found here. What percentage of the firm’s assets does the firm now finance using debt (liabilities)? If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm’s new debt ratio?

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