QA) Tanten Company has 200% debt and 80% equity. The borrowing rate is 12%. (1) If you own 4% of the stock of Abacus, what is your dollar return if the company has net operating income of $750,000 and the over all capitalization rate , Ko, is 15%? Value of the firm is 500,000 (2) What is the implied required rate of return on equity?

Q: sales of $9 million and total ex- Tech Corp had penses of $8.5 million. Assume that Tech wants to…

A: Amount to be borrowed is calculated based on the amount reinvested and the total capital investment…

Q: A company is all equity financed with 18,000 shares outstanding and each share sells for $22. The…

A: cost of capital of a firm which is all equity financed = cost of equity  cost of equity (unlevered…

Q: A firm’s stockholders expect a 10% rate of return, and there is $15M in common stock and retained…

A: Expected rate of return=10%Common stock and retained earnings=15 millionLoan=4millionAverage rate…

Q: 1. SodaFizz has debt outstanding that has a market value of $3 million. The company's stock has a…

A: Given, The market value of debt is $3 million The market value of equity is $6 million.

Q: Q3) Tanten Company has 200% debt and 80% equity. The borrowing rate is 12%. A.  If you own 4% of…

A: "Since you have posted a question with multiple sub-parts, we have solved the first three for you.…

Q: Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at…

A: Given that;Dividend per share is $2.75Growth rate is 9% per yearCurrent stock price is $33.00Tax…

Q: annual interest payment

A: Amount of finance required P1.5 million Interest rate on debt 16% Preference dividend rate 12%…

Q: If the company’s Interest on Debt is OMR 50,000 with 10% interest rate, the market value of Equity…

A: According to this approach, the valuation of a firm is not dependent on its capital structure (i.e.…

Q: Currently, Gamora Corporation has a capital structure that consists of 50% equity and 50% debt. The…

A: Given, Cost of debt = 8% Weight of debt = 50% Weight of equity = 50% Tax rate = 30% Year end…

Q: Tescac’s assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to be repaid…

A: Both, N(d1) and N(d2) computed by the use of:

Q: Tech Corp had gross sales of $9 million and total ex- penses of $8.5 million. Assume that Tech wants…

A: Sales = 9,000,000 Expenses = 8,500,000 Capital Investment = 1,000,000   Minimum amount of bonds to…

Q: (a) Samson told you that the company's pre-tax cost of debt is 5.7%, calculated by annual coupon…

A: Number of bonds = 12,000 Semi-annual coupon payment = $28.5 Time of maturity = $1,000 Corporate tax…

Q: A company is all equity financed with 18,000 shares outstanding and each share sells for $22. The…

A: In this we have to calculate the equity and debt value of company.

Q: Williamson, Inc., has a debt-equity ratio of 2. The firm's weighted average cost of capital is 10…

A: Given: Debt to equity = 2 WACC = 10% cost of equity re=21.6% tax = 30%

Q: ensen's, an all-equity firm, has a total market value of $548,000. The firm is thinking of adding…

A: Cost of unlevered equity = 12.6% Cost of debt = 6% Post Tax cost of Debt = 6% * (1-tax)…

Q: Fama's Llamas has a weighted average cost of capital of 9.5 percent. The company's cost of equity is…

A: Calculation of Target Debt-Equity Ratio:The target debt-equity ratio is 0.91.Excel Spreadsheet:

Q: Consider an all-equity firm that is contemplating going into debt. The market value of equity is…

A: The formula to calculate WACC is as follows:

Q: Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is…

A: Weighted average cost of capital (WACC) of a firm is combination of cost for component of capital in…

Q: Le Comp Ltd. is all equity financed with 18,000 shares outstanding and each share sells for $22. The…

A: In this we need to calculate the market capitalization of company.

Q: Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is…

A: given, D1=$2.50g=5.50%p0=$40rd=7.50%tax = 40%wd=45%we=55%

Q: A firm’s stockholders expect an 12% rate of return, and there is $20M in common stock and retained…

A: Cost of capital is the cost of financing the activities through outside means a company has to bear.…

Q: Alpha Corporation has average annual free cashflows to the equity holder and to the firm of…

A: Value of Equity is that money which was invested by the Equity share holder in the Company It will…

Q: Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is…

A: WACC is the average cost of capital which can be calculated the multiplying the weight of securities…

Q: River Cruises is all-equity-financed with 100,000 shares. It now proposes to issue $170,000 of debt…

A: Earnings = $117,000 Number of shares = 100,000 Proposed to issues Debt= 170,000 Interest rate = 10%…

Q: 's Ltd. is all equity financed with 18,000 shares outstanding and each share sells for $22. The EBIT…

A: The market value of a firm is determined by the entire market value of its outstanding shares, or…

Q: A corporation has 2 million shares selling at a price of 30 lei per share. The current debt ratio of…

A: The weighted average cost of capital refers to the combined and composite cost of different sources…

Q: An all-equity firm that has projected perpetual EBIT of $204,000 per year. The cost of equity is…

A: Unlevered Firm:  The unlevered firm is the firm which contains only equity capital in its capital…

Q: What will be the cost of equity after the repurchase?

A: Cost of Equity: It represents the cost of the issuer for raising equity capital from the investors.…

Q: Suppose a company's equity is currently selling for $55 per share, with 4 million shares…

A: Market value of Equity (E) = no. of equity shares x market price per share = 4 million * $55 = $220…

Q: The total book value of WTC's equity is $10 million, and book value per share is $20. The stock has…

A: Market to book ratio = 1.5 Book value of equity = $10 Million --------------------------------------…

Q: What is the firm's cost of equity?

A: Cost of Equity: It represents the cost of raising capital for the issuer from the equity investors.…

Q: Now (use the following information) suppose that: • The cost of debt (ra) is 3.875% (before tax), •…

A: Given, The cost of debt (rd) = 3.875% Flotation cost (F) = 7% of issue price Tax rate = 35% Last…

Q: A firm has a debt-to-equity ratio of 50 percent. Currently, it has interest expense of 500,000 on…

A: Computation of total equity is as follows: Debt to Equity Ratio=50%Debt to Equity Ratio=Total…

Q: Consider the following information for Federated Junkyards of America. Debt: $80,000,000 book value…

A: Given:Debt=$80000000 book value outstandingtrading at 95% of book valueyield to…

Q: Abacus Company has 30% debt and 70% equity. The borrowing rate is 12%. (1) If you own 5% of the…

A: Total value of firm is the total of value of debt and total of value of equity. To calculate return…

Q: A company currently has a WACC of 10.6 percent and no debt. The tax rate is 21 percent. a. What is…

A: Since you have a question with multiple subparts we will solve the first three subparts for you. If…

Q: Nelson Company's current liabilities are P50,000, its long-term liabilities are P150,000, and its…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Johnson Tire Distributors has debt with both a face and a market value of $90,000,000. This debt has…

A: given information   market value = 90,000,000  EBIT = 50,000,000 tax rate = 25% unleavered cost of…

Q: Aceline Corp is currently all equity financed. Cost of capital is 15% and firm value is 10 million.…

A:

Q: Consider the same two firms U and L - that are identical except for capital structure. Each firm…

A: EBIT= $650,000 Cost of Equity (Firm U)=10% Debt (Firm L)= $2 million with coupon rate 7% Tax rate=…

Q: An all-equity firm has expected earnings of $14,200 and a market value of $82,271. The firm is…

A: Weighted Average cost of capital (WACC) The WACC is the overall cost of capital from all the sources…

Q: David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity…

A: Given: Capital structure: Debt = 40% Equity = 60% Long term debt security = 9% Tax rate = 40% WACC…

Q: River Cruises is all-equity-financed with 100,000 shares. It now proposes to issue $300,000 of debt…

A:

Q: Ramos Berhad has the following capital structure which it considers optimal: Debt-30%, PS-18%,…

A: Computation:

Q: Lynx Corp. currently has a WACC of 18 percent. If the cost of debt capital for the firm is 11…

A: The cost of equity shows the return generated by common stock investors from firm whereas sane is…