Homework Answers
Add Answer to:
HNK Worldwide is a taxable corporation. It is currently an all equity firm that has 2,000...
Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost...
Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost of equity is 13 percent. It is considering substituting $8,000 in debt at 6 percent interest. The EBIT for the firm is $5,000 under either scenario, and the tax rate is 35 percent. Unlevered Firm $ 5,000 EBIT Interest EBT Taxes (.35) Net Income Levered Firm $5,000 480 4,520 5,000 1,750 3,250 1,582 2,938 Calculate the cost of equity and the WACC for the...
A firm has a debt-equity ratio of 1.4. The company's outstanding bonds have a 10% coupon...
A firm has a debt-equity ratio of 1.4. The company's outstanding bonds have a 10% coupon (with annual payments), mature in 5 years, and are currently selling for $1,182.62. Its WACC is 8.3 percent and the corporate tax rate 35 percent. a. What is the company's cost of equity capital? b. What is the company's unlevered cost of equity capital?
Cargill, Inc. is currently an all equity firm that has 180,000 shares of stock outstanding with...
Cargill, Inc. is currently an all equity firm that has 180,000 shares of stock outstanding with a market price of $50.50 a share. The current cost of equity is 12.6 percent and the tax rate is 25 percent. The firm is considering adding $3.76 million of debt with a coupon rate of 5.5 percent to its capital structure. The debt will be sold at par value. What eis the levered value of the equity? $6,540,000 $6,827,800 $7,142,900 $7,381,470 $6,270,000
FVQ is currently an all equity firm that has 3,000 shares of stock outstanding with a...
FVQ is currently an all equity firm that has 3,000 shares of stock outstanding with a market price of $18 a share. The tax rate is 40 percent. The firm is considering adding $35,000 of debt to its capital structure. The debt will be sold at par value. What is the levered value of the equity? Select one: O a $41,000 b. $68,000 C. $14,000 d. $33,000 e. $54,000
Globex Corp. is an all-equity firm, and it has a beta of 1. It is considering...
Globex Corp. is an all-equity firm, and it has a beta of 1. It is
considering changing its capital structure to 65% equity and 35%
debt. The firm’s cost of debt will be 10%, and it will face a tax
rate of 25%.
What will Globex Corp.’s beta be if it decides to make this
change in its capital structure?
a)1.40
b)1.47
c)1.26
d)1.54
US Robotics Inc. has a current capital structure of 30% debt
and 70% equity. Its current...
Hanover Tech is currently an all equity firm that has 130,000 shares of stock outstanding with...
Hanover Tech is currently an all equity firm that has 130,000 shares of stock outstanding with a market price of $36 a share. The tax rate is 35 percent. The firm is considering adding $1.5 million of debt. What is the new firm value after adding the debt? A.) 3.705m B.) 4.68m C.) 5.205m D.) 6.18m
Wildhorse Resources Company is currently an all-equity firm with a WACC of 17 percent and a...
Wildhorse Resources Company is currently an all-equity firm with a WACC of 17 percent and a 40 percent marginal tax rate. Wildhorse wants to move to a capital structure with $300 million of debt outstanding at an interest rate of 6 percent and a market value of equity equal to $900 million outstanding. Using M&M Proposition 2 with taxes, Equation 16.5, what is the expected return on equity at the new capital structure? (Round answer to 1 decimal place, e.g....
Cullumber Resources Company is currently an all-equity firm with a WACC of 16 percent and a...
Cullumber Resources Company is currently an all-equity firm with a WACC of 16 percent and a 40 percent marginal tax rate. Cullumber wants to move to a capital structure with $460 million of debt outstanding at an interest rate of 6 percent and a market value of equity equal to $1,380 million outstanding. Using M&M Proposition 2 with taxes, Equation 16.5, what is the expected return on equity at the new capital structure? (Round answer to 1 decimal place, e.g....
General Forge and Foundry Corporation currently has no debt in its capital structure, but it is...
General Forge and Foundry Corporation currently has no debt in
its capital structure, but it is considering using some debt and
reducing its outstanding equity. The firm’s unlevered beta is 1.25,
and its cost of equity is 13.00%. Because the firm has no debt in
its capital structure, its weighted average cost of capital (WACC)
also equals 13.00%. The risk-free rate of interest ( rRF ) is 3%,
and the market risk premium ( RPM ) is 8%. General Forge’s...
The Gulf Power Company currently is an all-equity firm. The value of Gulf Power's equity is...
The Gulf Power Company currently is an all-equity firm. The value of Gulf Power's equity is $12,000,000 and there are 600,000 shares outstanding. The expected annual EBIT of Gulf Power is $2,400,000. Those earnings are also expected to remain constant into the foreseeable future. Gulf Power is in the 40-percent tax bracket. The Gulf Power Company plans to announce that it will issue $3,000,000 of perpetual bonds and uses the proceeds to repurchase common stock. The bonds will have a...
Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost of equity is 13 percent. It is considering substituting $8,000 in debt at 6 percent interest. The EBIT for the firm is $5,000 under either scenario, and the tax rate is 35 percent. Unlevered Firm $ 5,000 EBIT Interest EBT Taxes (.35) Net Income Levered Firm $5,000 480 4,520 5,000 1,750 3,250 1,582 2,938 Calculate the cost of equity and the WACC for the...
A firm has a debt-equity ratio of 1.4. The company's outstanding bonds have a 10% coupon (with annual payments), mature in 5 years, and are currently selling for $1,182.62. Its WACC is 8.3 percent and the corporate tax rate 35 percent. a. What is the company's cost of equity capital? b. What is the company's unlevered cost of equity capital?
Cargill, Inc. is currently an all equity firm that has 180,000 shares of stock outstanding with a market price of $50.50 a share. The current cost of equity is 12.6 percent and the tax rate is 25 percent. The firm is considering adding $3.76 million of debt with a coupon rate of 5.5 percent to its capital structure. The debt will be sold at par value. What eis the levered value of the equity? $6,540,000 $6,827,800 $7,142,900 $7,381,470 $6,270,000
FVQ is currently an all equity firm that has 3,000 shares of stock outstanding with a market price of $18 a share. The tax rate is 40 percent. The firm is considering adding $35,000 of debt to its capital structure. The debt will be sold at par value. What is the levered value of the equity? Select one: O a $41,000 b. $68,000 C. $14,000 d. $33,000 e. $54,000
Globex Corp. is an all-equity firm, and it has a beta of 1. It is
considering changing its capital structure to 65% equity and 35%
debt. The firm’s cost of debt will be 10%, and it will face a tax
rate of 25%.
What will Globex Corp.’s beta be if it decides to make this
change in its capital structure?
a)1.40
b)1.47
c)1.26
d)1.54
US Robotics Inc. has a current capital structure of 30% debt
and 70% equity. Its current...
General Forge and Foundry Corporation currently has no debt in
its capital structure, but it is considering using some debt and
reducing its outstanding equity. The firm’s unlevered beta is 1.25,
and its cost of equity is 13.00%. Because the firm has no debt in
its capital structure, its weighted average cost of capital (WACC)
also equals 13.00%. The risk-free rate of interest ( rRF ) is 3%,
and the market risk premium ( RPM ) is 8%. General Forge’s...
Most questions answered within 3 hours.
-
(Ratio Analysis): Last year Co. XYZ had sales of $ 400,000, with
“cost of goods sold”...
asked 3 minutes ago -
1. If a corporation purchases land and building and subsequently
tears down the building and uses...
asked 11 minutes ago -
Consider a 23-year bond with 7 percent annual coupon payments.
The market rate (YTM) is 6.4...
asked 14 minutes ago -
a tuba creates a 4th harmonic of frequency 116.5 Hz. what is the
frequency of the...
asked 20 minutes ago -
A coconut mass 2kg falls from a 30m tall tree. The coconut falls
and comes to...
asked 23 minutes ago -
Group Policies
Research GROUP POLICY OBJECTS (GPO'S)
You can start in the Windows Server 2012 eBook...
asked 27 minutes ago -
software engineering
Problems.
Create a use case diagram for class registration for a
university.
Create a...
asked 27 minutes ago -
You are trying to convince your friend who wants to attend
medical school to take BY123...
asked 42 minutes ago -
Subject: C++
I have created a class called QueueOfIntegers in a file called
QueueOfIntegers.h, which is...
asked 42 minutes ago -
calculate the number of molecules of gas in a
container of 2.0 liter at 30 degrees...
asked 59 minutes ago -
1.which of the following is a phototroph?
a. sulfolobus
b. chloroflexus
c. bacteroidetes
d. deinococcus radioduran...
asked 55 minutes ago -
The group of companies LC "High-precision measuring instruments"
is the global provider of measurement, analysis and...
asked 1 hour ago