the possible EBITs for the coming year are $300, $350, and $ 400 with the probabilities 20%, 40%, and 40% respectively. The interest payment is $90 and the corporate tax rate is 40%. There are 50 common shares outstanding. Training What is the standard deviation of EPS? A.).4490B.).5112C.).3412 D .).6322

the possible EBITs for the coming year are $300, $350, and $ 400 with the probabilities 20%, 40%, and 40% respectively. The interest payment is $90 and the corporate tax rate is 40%. There are 50 common shares outstanding. Training What is the standard deviation of EPS? A.).4490B.).5112C.).3412 D .).6322

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Calculate the WACC for the following. Assume the tax rate to be 21%. Debt: 16,000 6.2% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 108% of par; the bonds make semiannual payments Common stock: 535,000 shares outstanding, selling for $81 per share; beta is 1.2. Preferred stock: 20,000 shares of 4.2% preferred stock outstanding, currently selling for $92 per share. Par value is $100. Market: 7% market risk premium and 3.1% risk free rate
22.As the chief financial officer of Adirondack Designs, you have the following information- Next year's expected net incone after tax but before new financing Sinking-fund paynents due next year on the existing debt interest due next year on the existing debt Common stock price, per share comnon shares outstanding company tax rate ( 51 nituion 5 26 million 521 nition 533.5 31 mition35ka. Coiculate Adirondack's times-interest-earned ratio for next year assuming the firm raises$61million of new debt at an interest rate of 2 percent. b. Calculote Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund poyments on the new debt wil equal$3.0milion. c. Calculate next year's earnings per share assuming Adirondack raises the$61millon of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at$22a share instead of raising new debt Note: Do not round intermediate…
Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company’s outstanding bonds is 8.0%, its tax rate is 35%, the next expected dividend is $0.80 a share, the dividend is expected to grow at a constant rate of 7.00% a year, the price of the stock is $17.50 per share, the flotation cost for selling new shares is F = 8%, and the target capital structure is 30% debt and 70% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company's outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is S0.65 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is $17.00 per share, the flotation cost for selling new shares is F 10%, and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget? Please provide each step and why, and how to get to the next step
The analyst estimates that after three years the National Inc’s free cash flow will grow at a constant rate of 6% per year. The analyst estimates that the company’s WACC is 10%. The total market value of debt and preferred stock is P25,000 and there are 1,000 outstanding shares of common stock. What is the intrinsic value of the company’s common stock? a. P99.50 b. P84.34 c. P75.31 d. P112.22
You were hired as a consultant to XYZ Company, whose target capital structure is 35% debt, 7% preferred, and 58% common equity. The interest rate on new debt is 8.50%, the yield on the preferred is 4.20%, the cost of common from retained earnings is 16.15%, and the tax rate is 37.00%. The firm will not be issuing any new common stock. What is XYZ's WACC?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. Group of answer choices 9.92% 11.77% 11.54% 13.38% 10.96%
Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company’s outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is $0.65 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is $16.00 per share, the flotation cost for selling new shares is F = 10%, and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget? (Hint: required return on stock needs to be adjusted by flotation cost re = D1/(P0 × (1 - F)) + g) Group of answer choices 8.58% 7.80% 9.61% 9.45% 7.88%
Given the following, find the WACC assuming the tax rate is 30%. Debt: 3,500 bonds outstanding with 7.20% p.a. coupons paid semi-annually, $1000 face value, 25 years to maturity, current market yield is 5.72% p.a. Ordinary shares: 175,000 shares outstanding selling for $37 per share with beta of 1.15. Preference shares: pay a dividend of 8% p.a. forever on a $15 face value, 45,000 outstanding, currently selling for $14.20 per share. Other information: Market risk premium = 7%, risk-free rate = 3.1% p.a. Calculate the WACC. Source Market Value Weight Cost of Capital WACC Component
You were hired as a consultant to XYZ Company, whose target capital structure is 30% debt, 8% preferred, and 62% common equity. The interest rate on new debt is 6.30%, the yield on the preferred is 5.40%, the cost of common from retained earnings is 16.80%, and the tax rate is 40.00%. The firm will not be issuing any new common stock. What is XYZ's WACC?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. A. 10.30% B. 9.95% C. 14.62% D. 11.98% E. 9.23%
The unlevered bheta is 1, D/E is 60/40 and the tax rate is .3. Additionally, we know the treasury bond rate is .08 and the ROR of the S&P has been 10%. Derive the stock price of Mahir, if Mahir pays a dividend of $12 per share and it will not grow in the future.
The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividends (D1) at the end of the current year will be $1.64. The growth rate (g) is 8 percent and the discount rate (Ke) is 13 percent. What should be the price of the stock to the public? If there is a 7 percent total underwriting spread on the stock, how much will the issuing corporation receive? If the issuing corporation requires a net price of $31.30 (proceeds to the corporation) and there is a 7 percent underwriting spread, what should be the price of the stock to the public? (Round to two places to the right of the decimal point.)
You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.6%, the yield on the preferred is 6.00%, the cost of retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new stock. Quigley's WACC is ______ %. (enter two decimals. E.g. 9.99%)

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