Dora estimates that the value of Firm A is $4m. If Firm A's debt is worth...
Dora estimates that the value of Firm A is $4m. If Firm A's debt is worth $1m, and there are 200,000 shares outstanding, what is the market price of equity?
Group of answer choices
Can't be calculated
$20
$15
$10
Homework Answers
Value of firm = Value of equity + Value of debt
$ 4 m = Value of equity + $ 1m
Value of equity = $ 3m
market price of equity =Value of equity / shares outstanding
= $ 3m/ 200,000 shares
= $ 30,00,000 / 200,000
= $ 15
Hence the correct answer is $ 15
Add Answer to:
Dora estimates that the value of Firm A is $4m. If Firm A's debt
is worth...
19. A firm has a cost of debt of 6 percent and a cost of equity...
19. A firm has a cost of debt of 6 percent and a cost of equity of 13.7 percent. The debt–equity ratio is 1.02. There are no taxes. What is the firm's weighted average cost of capital? 20. Hotel Cortez is an all-equity firm that has 5,500 shares of stock outstanding at a market price of $15 per share. The firm's management has decided to issue $30,000 worth of debt and use the funds to repurchase shares of the outstanding...
An all-equity firm has 100,000 shares of common stock outstanding. Investors require a 25% return on the firm’s equity....
An all-equity firm has 100,000 shares of common stock outstanding. Investors require a 25% return on the firm’s equity. The firm is expected to live for one year. Its end-of-year cash flows can be $1M, $2M, $3M, $4M, and $5M with equal probabilities. There are no corporate or personal taxes, and no bankruptcy costs. a) What is the value of the firm b) Suppose the firm issues debt with face value of $1M maturing in a year with no coupons,...
A firm has 65% probability of being worth $100 million and a 35% probability of being...
A firm has 65% probability of being worth $100 million and a 35% probability of being worth $130 million. There is one bond outstanding that promises to pay $100 million at an interest rate of 7%. The cost of capital for the firmʹs projects is 9%. What are the current proportions of debt and equity financing used by the firm? Group of answer choices Not determinable 92.19% debt; 7.81% equity 7% debt; 93% equity 43.48% debt; 56.52% equity
MV Corporation has debt with market value of $97 million, common equity with a book value...
MV Corporation has debt with market value of $97 million, common equity with a book value of $104 million, and preferred stock worth $20 milion outstanding. Its common equity trades at $54 per share, and the firm has 5.8 million shares outstanding. What weights should MV Corporation use in its WACC? The debt weight for the WACC calculation is □%. (Round to two decimal places.)
Firm A is being acquired by Firm B for $24,000 worth of Firm B stock. The...
Firm A is being acquired by Firm B for $24,000 worth of Firm B stock. The incremental value of the acquisition is $3,500. Firm A has 1,500 shares of stock outstanding at a price of $15 a share. Firm B has 1,200 shares of stock outstanding at a price of $30 a share. What is the value per share of Firm B after the acquisition?
A firm has a market value equal to its book value. Currently, the firm has excess...
A firm has a market value equal to its book value. Currently, the firm has excess cash of $6,000 and other assets of $15,000. Equity is worth $21,000. The firm has 200 shares of stock outstanding and net income of $1,600. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? Multiple Choice $83 $28 $75 $91 $20
ABC Corporation is an all-equity firm. The total market value of the firm is $60 million...
ABC Corporation is an all-equity firm. The total market value of the firm is $60 million (which includes $20 million in cash), and there are 1,500,000 shares outstanding. There are no taxes. The firm is considering using $15 million of cash to pay a special one-time dividend or repurchase shares. The company’s current earnings per share are $5.00. If the firm pays the dividend, what will be the share price of ABC stock on the ex-dividend date? ABC Corporation is...
The company has the following market values of debt and equity: Market value of debt: $50...
The company has the following market values of debt and equity: Market value of debt: $50 Market value of equity: $50 Therefore, the total market value of the assets is $100. The firm has 10 shares outstanding; therefore, the current price per share is $5. The managers are considering an investment project with an initial cost of 30. They believe that the project should be worth $40. The company announces that it will issue new common stocks to obtain $30....
Your firm has debt worth $200,000, with a yield of 9 percent, and equity worth $300,000....
Your firm has debt worth $200,000, with a yield of 9 percent, and equity worth $300,000. It is growing at a 5 percent rate, and faces a 40 percent tax rate. A similar firm with no debt has a cost of equity of 12 percent. Under the MM extension with growth, what is its cost of equity? 12.0% 9.36% 12.8% 13.2% 14.0%
Vader Corp. is a firm that generates a perpetual EBIT of $50,000 per year. The firm...
Vader Corp. is a firm that generates a perpetual EBIT of $50,000 per year. The firm currently has no debt and has 50,000 shares outstanding. The cost of capital is 10%. The firm is thinking of issuing $200,000 in debt and using the proceeds to repurchase equity. The firm could borrow the funds at 8%. If there are no corporate taxes and M&M Proposition I holds, what would be the market value of Vader Corp. if it issues the debt...
MV Corporation has debt with market value of $97 million, common equity with a book value of $104 million, and preferred stock worth $20 milion outstanding. Its common equity trades at $54 per share, and the firm has 5.8 million shares outstanding. What weights should MV Corporation use in its WACC? The debt weight for the WACC calculation is □%. (Round to two decimal places.)
A firm has a market value equal to its book value. Currently, the firm has excess cash of $6,000 and other assets of $15,000. Equity is worth $21,000. The firm has 200 shares of stock outstanding and net income of $1,600. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? Multiple Choice $83 $28 $75 $91 $20
Most questions answered within 3 hours.
-
Oakdale Fashions, Inc. had $245,000 in 2018 taxable income.
Using the tax schedule in Table 2.3...
asked 1 minute ago -
The marketing class at CSUS had an average score of 150. An
educational analyst determined that...
asked 1 hour ago -
Justin Case has purchased a $250 000 home by putting 20 % down
and taking out...
asked 1 hour ago -
1. In a labor market, marginal cost for a firm is
____________.
a. recruiting cost
b....
asked 2 hours ago -
On January 1, 2019, ABC Company issued $60,000,000 of 20-year,
10.5% bonds when the market rate...
asked 2 hours ago -
39.4% of US homes continue to use a landline in addition to cell
phone service. 3...
asked 3 hours ago -
Starting with benzene, synthesize 1-phenyl-1-butyne.
Show intermediates and reagents.
asked 3 hours ago -
Create a 32-run crossed array design with six control factors
and two noise factors such that...
asked 4 hours ago -
A 500g sample of sand from source A has the following amounts
retained on each sieve....
asked 4 hours ago -
In
your own words, please explain the essay by John Keynes wrote "The
End of Laissez...
asked 4 hours ago -
How are the matrix and pixels related? Why are smaller
pixels better for diagnostic quality?
asked 4 hours ago -
2. An AC generator has 80 rectangular loops on
its armature. Each loop is 11 cm...
asked 4 hours ago