I.You plan on opening a series of martial arts studios, based on a newly popular form of martial art. You willcall the company Ashley's Tailors. You have spent $45,000 on marketing research, which indicates a stronginterest by consumers. You have martial arts equipment that you would have to contribute that couldotherwise be sold today for $23,000 net of taxes. Your company's debt ratio will be 56%. The marginalcorporate tax rate is 21%.There is a publicly traded company called Sarah's Tailors that you believe is most comparable to yourproject. They have a debt ratio of 13%. The yield to maturity on their debt is 5.36%. With a debt ratio of 56%,you think that the yield to maturity on their debt would be 6.06%. They also have a marginal tax rate of 21%.Their stock beta is .45.4%.The expected return on the market is 12.4% and the risk-free rate of interest isபி(SHOW WORK. NO EXCEL)a. Name any opportunity costs.b. Name any sunk costs.c. Calculate RO (the unlevered required return on the stock).d. What is Rs (the required return on equity)?e. What is the WACC?

(a). Opportunity Cost = $23,000 This is the amount of next best alternative. If we do not start the…

You plan on opening a series of martial arts studios, based on a newly popular form of martial art. You will call the company Ashley's Tailors. You have spent $45,000 on marketing research, which indicates a strong interest by consumers. You have martial arts equipment that you would have to contribute that could otherwise be sold today for $23,000 net of taxes. Your company's debt ratio will be 56%. The marginal cornorate tax rate is 21%

You plan on opening a series of martial arts studios, based on a newly popular form of martial art. You will call the company Ashley's Tailors. You have spent $45,000 on marketing research, which indicates a strong interest by consumers. You have martial arts equipment that you would have to contribute that could otherwise be sold today for $23,000 net of taxes. Your company's debt ratio will be 56%. The marginal cornorate tax rate is 21%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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