Question

these are the only informations i have. 2-RMEX has a market cap of $ 100 million...

these are the only informations i have.

2-RMEX has a market cap of $ 100 million and debt of $ 40 million. RMEX wishes to maintain the same capital structure in the future. The corporate tax rate is 33%. If the operating cash flow (FME) forecast by RMEX for next year is $ 7 million and their expected growth is 3% per annum ad infinitum. What is the after-tax weighted average cost of capital (WACC) of the RMEX business?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Solution - Given market Cap $ 100 million debt $ 40 mil free cash flow = $7 million value of the firm = market capital & debt

Add a comment
Know the answer?
Add Answer to:
these are the only informations i have. 2-RMEX has a market cap of $ 100 million...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • MANU has a market cap of $ 100 million and debt of $ 40 million. MANU...

    MANU has a market cap of $ 100 million and debt of $ 40 million. MANU wishes to maintain the same capital structure in the future. The corporate tax rate is 33%. If the free cash flow forecasted by MANU for next year are $ 7 million and their expected growth every year is 3% perpetually, what is the after-tax weighted average cost of capital (WACC) of the MANU business?

  • RMEX has a market capitalization of $100 million and $40 million in debt. RMEX intends to...

    RMEX has a market capitalization of $100 million and $40 million in debt. RMEX intends to maintain the same capital structure in the future. The corporate tax rate is 33%. If RMEX's anticipated operating cash flow (OCEF) for next year is $7 million and its anticipated growth is 3% per year to infinity. What is RMEX's after-tax weighted average cost of capital (WACC)?

  • On January 1, the total market value of the Farrah Fowler (FF) Company was $100 million....

    On January 1, the total market value of the Farrah Fowler (FF) Company was $100 million. The firm’s present market value capital structure, show below, is considered to be optimal. Assume that there is no short-term debt. Debt = $20,000,000 Common Equity = $80,000,000 Total capital = $100,000,000 New bonds will have a 6.25 percent coupon rate and be sold at par (thus YTM = coupon rate). Common stock is currently selling for $75 per share. Stockholders’ required rate of...

  • On January 1, the total market value of the Farrah Fowler (FF) Company was $100 million....

    On January 1, the total market value of the Farrah Fowler (FF) Company was $100 million. The firm’s present market value capital structure, show below, is considered to be optimal. Assume that there is no short-term debt. Debt = $20,000,000 Common Equity = $80,000,000 Total capital = $100,000,000 New bonds will have a 6.25 percent coupon rate and be sold at par (thus YTM = coupon rate). Common stock is currently selling for $75 per share. Stockholders’ required rate of...

  • On January 1, the total market value of the Tysseland Company was $60 million. During the...

    On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $25 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Debt Common equity Total capital $30,000,000 30,000,000 $60,000,000 The current price of firm's 15-year, 12% coupon, semiannual payment noncallable bonds is $1,153.72. New bonds will be privately placed with no flotation cost. Common stock is currently selling...

  • Remax(RMX) currently has no debt in its capital structure. The beta of its equity us 1.52....

    Remax(RMX) currently has no debt in its capital structure. The beta of its equity us 1.52. For each year into the indefinite future. Remex's free cash flow is expected to equal 30 million. Remex is considering changing its capital structure by issuing debt and using the proceeds to buy back stock. It will do so in such a way that it will have a 35% debt-equity ratio after the change and will maintain this debt-equity ratio forever. Assume that Remex's...

  • Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares...

    Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $10.10 million, and its tax rate is 35%. Pettit can change its capital structure either by increasing its debt to 70% (based on market values) or decreasing it to 30%. If it decides to increase its use of leverage, it must call its old...

  • Problem 16-9 Capital Structure Analysis Pettit Printing Company has a total market value of $100 million,...

    Problem 16-9 Capital Structure Analysis Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $11.33 million, and its tax rate is 15%. Pettit can change its capital structure either by increasing its debt to 70% (based on market values) or decreasing it to 30%. If it decides to increase its use of leverage,...

  • Problem 15-9 Capital Structure Analysis Pettit Printing Company has a total market value of $100 million,...

    Problem 15-9 Capital Structure Analysis Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $11.72 million, and its tax rate is 15%. Pettit can change its capital structure either by increasing its debt to 75% (based on market values) or decreasing it to 25%. If it decides to increase its use of leverage,...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT