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You have the following data on The Home Depot, Inc. Market value of long-term debt: $20,888...
1. You have the following data on The Home Depot, Inc. Market value of long-term debt:...
1. You have the following data on The Home Depot, Inc. Market value of long-term debt: $20,888 million Market value of common stock: $171,138 million Beta: 1.12 Yield to maturity on debt with 10 years to maturity: 2.28% You also have the following market data: Expected annual return on the market portfolio: 8% Annual risk-free rate: 1% Assume that if Home Depot issues new bonds, the bonds will have 10 years to maturity. What is the company’s return on assets?...
For the most recent fiscal year, book value of long-term debt at Schlumberger was $10797 million....
For the most recent fiscal year, book value of long-term debt at Schlumberger was $10797 million. The market value of this long-term debt is approximately equal to its book value. Schlumberger’s share price currently is $44.11. The company has 1,000 million shares outstanding. Managers at Schlumberger estimate that the yield to maturity on any new bonds issued by the company will be 13.65%. Schlumberger’s marginal tax rate would be 35%. Schlumberger’s beta is 0.77. Suppose that the expected return on...
For the most recent fiscal year, book value of long-term debt at Schlumberger was $10,203 million....
For the most recent fiscal year, book value of long-term debt at Schlumberger was $10,203 million. The market value of this long-term debt is approximately equal to its book value. Schlumberger’s share price currently is $41.5. The company has 1,000 million shares outstanding. Managers at Schlumberger estimate that the yield to maturity on any new bonds issued by the company will be 10.63%. Schlumberger’s marginal tax rate would be 35%. Schlumberger’s beta is 0.74. Suppose that the expected return on...
Harris, Inc., has equity with a market value of $23.7 million and debt with a market...
Harris, Inc., has equity with a market value of $23.7 million and debt with a market value of $9.48 million. Treasury bills that mature in one year yield 6 percent per year and the expected return on the market portfolio is 11 percent. The beta of the company's equity is 1.22. The company pays no taxes. a. What is the company's debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What...
Hatter, Inc., has equity with a market value of $23.3 million and debt with a market...
Hatter, Inc., has equity with a market value of $23.3 million and debt with a market value of $6.99 million. The cost of debt is 9 percent per year. Treasury bills that mature in one year yield 5 percent per year, and the expected return on the market portfolio over the next year is 12 percent. The beta of the company’s equity is 1.18. The firm pays no taxes. a. What is the company’s debt?equity ratio? (Do not round intermediate...
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: ...
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $20,000,000 Fixed assets 70,000,000 Notes payable $10,000,000 Long-term debt 30,000,000 Common stock (1 million shares) 1,000,000 Retained earnings 39,000,000 Total assets $100,000,000 Total liabilities and equity $100,000,000 The notes payable are to banks, and the interest rate on this debt is 8%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but...
The notes payable are to banks, and the interest rate on this debt is 10%, the...
The notes payable are to banks, and the
interest rate on this debt is 10%, the same as the rate on new bank
loans. These bank loans are not used for seasonal financing but
instead are part of the company's permanent capital structure. The
long-term debt consists of 30,000 bonds, each with a par value of
$1,000, an annual coupon interest rate of 8%, and a 15-year
maturity. The going rate of interest on new long-term debt, rd, is
10%,...
Someone please help me with this question point b) Fan Plc is a publicly traded firm. The market value of its equity is £70,000,000 and its debt £30,000,000. The yield to maturity of the debt is 5%...
Someone please help me with this question point b)
Fan Plc is a publicly traded firm. The market value of its equity is £70,000,000 and its debt £30,000,000. The yield to maturity of the debt is 5%, the shareholders require a 20% return, and the company pays 30% corporate tax. They have recently decided to repurchase £10,000,000 worth of equity, and finance the repurchase through the issuance of new debt. a) Will this change in capital structure affect the market...
A firm has the following capital structure: £100 million of equity (market value) with 100 million...
A firm has the following capital structure: £100 million of equity (market value) with 100 million shares outstanding, and £100 million of debt. The beta of the firm’s stock is 1.6. The firm’s cost of equity is 10 percent, and the yield on riskless bonds is 2 percent. There is no tax. Assuming that the firm can borrow at the risk-free rate and that both CAPM (Capital Asset Pricing Model) and the Modigliani-Miller theorem hold, answer the following questions. i)...
c) A firm has the following capital structure: £100 million of equity (market value) with 100...
c) A firm has the following capital structure: £100 million of equity (market value) with 100 million shares outstanding, and £100 million of debt. The beta of the firm’s stock is 1.6. The firm’s cost of equity is 10 percent, and the yield on riskless bonds is 2 percent. There is no tax. Assuming that the firm can borrow at the risk free rate and that both CAPM (Capital Asset Pricing Model) and the Modigliani-Miller theorem hold, answer the following...
Harris, Inc., has equity with a market value of $23.7 million and debt with a market value of $9.48 million. Treasury bills that mature in one year yield 6 percent per year and the expected return on the market portfolio is 11 percent. The beta of the company's equity is 1.22. The company pays no taxes. a. What is the company's debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What...
The notes payable are to banks, and the
interest rate on this debt is 10%, the same as the rate on new bank
loans. These bank loans are not used for seasonal financing but
instead are part of the company's permanent capital structure. The
long-term debt consists of 30,000 bonds, each with a par value of
$1,000, an annual coupon interest rate of 8%, and a 15-year
maturity. The going rate of interest on new long-term debt, rd, is
10%,...
Someone please help me with this question point b)
Fan Plc is a publicly traded firm. The market value of its equity is £70,000,000 and its debt £30,000,000. The yield to maturity of the debt is 5%, the shareholders require a 20% return, and the company pays 30% corporate tax. They have recently decided to repurchase £10,000,000 worth of equity, and finance the repurchase through the issuance of new debt. a) Will this change in capital structure affect the market...
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