FUNDAMENTALS OF CORP.FIN.(LL)-W/CONNECT
10th Edition
ISBN: 9781260848670
Author: BREALEY
Publisher: MCG
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Question
Chapter 15, Problem 10QP
a.
Summary Introduction
To calculate: The average under pricing in dollars of this sample of IPOs.
b.
Summary Introduction
To calculate: The average initial returns.
c.
Summary Introduction
To discuss: Whether the given statement is classified under true of false.
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Oxy Corporation uses debt, preferred stock, and common stock to raise capital. The firm's capital structure targets the following proportions: debt,
53%; preferred stock, 17%; and common stock, 30%. If the cost of debt is 7.2%, preferred stock costs 9.4%, and common stock costs 11.3%, what
is Oxy's weighted average cost of capital (WACC)?
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NPV Calculate the net present value (NPV) for a 20-year project with an initial investment of $40,000 and a cash inflow of $6,000 per year. The cost
of capital is 13%. Comment on the acceptability of the project.
The project's net present value is $
(Round to the nearest cent.)
Is the project acceptable? (Select the best answer below.)
○ Yes
Ο No
Calculating initial cash flow DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a
proposed computer-controlled automatic-feed roaster will be $130,000. The firm has a chance to sell its 3-year-old roaster for $34,600. The
existing roaster originally cost $60,000 and was being depreciated using MACRS and a 7-year recovery period (see the table
subject to a 21% tax rate.
a. What is the book value of the existing roaster?
b. Calculate the after-tax proceeds of the sale of the existing roaster.
c. Calculate the change in net working capital using the following figures:
Anticipated Changes in Current Assets and
). DuPree is
Current Liabilities
Accruals
Inventory
Accounts payable
Accounts receivable
Cash
Notes payable
-$19,900
+49,600
+39,400
+ 69,000
0
+15,100
d. Calculate the initial cash flow associated with the proposed new roaster.
a. The remaining book value of the existing roaster is $
(Round to the nearest dollar.)
b. The after-tax…
Chapter 15 Solutions
FUNDAMENTALS OF CORP.FIN.(LL)-W/CONNECT
Ch. 15 - Prob. 1QPCh. 15 - Prob. 2QPCh. 15 - Prob. 3QPCh. 15 - Prob. 4QPCh. 15 - Prob. 5QPCh. 15 - Prob. 7QPCh. 15 - Prob. 8QPCh. 15 - Prob. 9QPCh. 15 - Prob. 10QPCh. 15 - Prob. 11QP
Ch. 15 - Prob. 12QPCh. 15 - Prob. 13QPCh. 15 - Prob. 14QPCh. 15 - Prob. 15QPCh. 15 - Prob. 16QPCh. 15 - Prob. 17QPCh. 15 - Prob. 18QPCh. 15 - Prob. 19QPCh. 15 - Prob. 20QPCh. 15 - Prob. 21QPCh. 15 - Prob. 22QPCh. 15 - Prob. 23QPCh. 15 - Prob. 24QPCh. 15 - Prob. 25QPCh. 15 - Prob. 26QPCh. 15 - Prob. 27QP
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