Please help me solve this question using Excel Problem 12-14 Finding the WACC [LO3]You are given the following information for Lightning Power Company. Assume the company's tax rate is 23percent.Debt:Common stock:Preferred stock:Market:23,000 7.2 percent coupon bonds outstanding, $1,000 par value, 19 yearsto maturity, selling for 106 percent of par; the bonds make semiannualpayments.560,000 shares outstanding, selling for $74 per share; beta is 1.17.25,000 shares of 5 percent preferred stock outstanding, a $100 parvalue, selling for $95 per share.7 percent market risk premium and 5.1 percent risk-free rate.What is the company's WACC?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,e.g., 32.16.WACC%

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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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Ch. 13. For questions 7, 8, and 9, use the following information: 7.) Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. What is the aftertax cost of debt? Format as a percentage and round to two places past the decimal point as "X.XX" 5.53 8.) Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. Using the pretax cost of debt from Question…
Ch. 13. For questions 7, 8, and 9, use the following information: Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. What is the aftertax cost of debt? Format as a percentage and round to two places past the decimal point as "X.XX"
for question 9 Ch. 13. For questions 7, 8, and 9, use the following information: 7.) Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. What is the aftertax cost of debt? Format as a percentage and round to two places past the decimal point as "X.XX" 5.53 8.) Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. Using the pretax cost of…
Problem 12-11 Finding the WACC You are given the following information for Tara Ita Power Co. Assume the company’s tax rate is 22 percent. Debt: 10,000 7.1 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.04. Market: 10 percent market risk premium and 5.1 percent risk-free rate. What is the company's WACC?
9:13MM. kuldeepkumar 4Gl : Just now Synovec Corporation is growing quickly. Dividends are expected to grow at a rate of 32 percent for the next three years, with the growth rate falling off to a constant 7.2 percent, thereafter. If the required return is 14 percent and the company just paid a dividend of $3.35, what is the current share price? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price <
A5 10 c 10. The management of Oodles N Noodles Inc. is contemplating a 20% stock dividend. The company currently has cash of $300,000, fixed assets of $3.5 million, and debt of $1 million. Its net income for the most recent fiscal year was $500,000. The company’s shares are currently selling for $15 per share, and it has one million shares outstanding. Assume that there are no costs associated with issuing a stock dividend. c. If all that the company’s shareholders care about are their wealth and the P/E ratio, should the company go ahead with the stock dividend?
16.H-Model (LO2, CFA6) The dividend for Should I, Inc., is currently $1.25 per share. It is expected to grow at 20 percent next year and then decline linearly to a 5 percent perpetual rate beginning in four years. If you require a 15 percent return on the stock, what is the most you would pay per share?
Q. 13 Before Pay Inc. (BPI) currently has an ROE of 10%, total assets of $1000 and a dividend payout ratio of 100%. BPI's beta is currently equal to 1 and they have no debt. The marginal corporate income tax rate is equal to 0%. The long-term risk free rate is currently equal to 3% and the expected stock market risk premium is equal to 7%. If BPI increase their debt-to-equity ratio to 3 with an after-tax cost of debt equal to 3% and simultaneously reduce their dividend payout ratio to 50% then BPI's new intrinsic value of equity will be equal to: a) $500 b) $250 c) $1000 d) $333
Ch. 16. ABC Company is currently an unlevered firm. The company expects to generate $152.3 in earnings before EBIT in perpetuity. The corporate tax rate is 21 percent, implying after tax earnings of $120.32. All earnings after tax are paid out as dividends. The firm is considering a capital restructuring to allow $228 of debt. Its cost of debt capital is 10 percent. Unlevered firms in the same industry have a cost of equity capital of 15 percent. What is the new value of ABC Company? Round to the nearest cent and format as "XXX.XX"
Problem 12-22 Calculating the Cost of Debt [LO2] Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. Bond Coupon Rate Price Quote Maturity Face Value 1 8.60% 106.1 6 years $ 20,000,000 2 6.60 94.3 9 years 38,000,000 3 8.30 104.9 16.5 years 43,000,000 4 8.80 94.7 26 years 58,000,000 If the corporate tax rate is 21 percent, what is the aftertax cost of the company’s debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
26.) 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
A5 10 b 10. The management of Oodles N Noodles Inc. is contemplating a 20% stock dividend. The company currently has cash of $300,000, fixed assets of $3.5 million, and debt of $1 million. Its net income for the most recent fiscal year was $500,000. The company’s shares are currently selling for $15 per share, and it has one million shares outstanding. Assume that there are no costs associated with issuing a stock dividend. b. The company’s management would like to hold its earnings per share within the range of 0.4–0.6. Given this constraint, should the company go ahead with the stock dividend?

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