Alto and Tenor have 17,400 shares of stock outstanding at a market price of $27 per share. The firm also has $140,000 of 6.2 percent bonds outstanding that are selling at par. The firm does not expect to pay taxes for the foreseeable future. The cost of equity is 15.3 percent. What is the value of RWACC
Q: You have $300,000 saved for retirement. Your account earns 5% interest. How much will you be able to...
A:
Q: In how many years is required for $2000 to increase by $3000 if interest is 12% compounded semi annu...
A: Compound interest (also known as compounding interest) is interest calculated on a loan or deposit u...
Q: AnthroPort has a beta of 1.1 and its RWACC is 13.6 percent. The market risk premium is 7.2 percent a...
A: The value of the firm at year 4 is calculated with the help of WACC and growth rate
Q: In what circumstances can a taxpayer challenge an assessment outside the ordinary appeal process. Di...
A: In matters determined by the Regional Trial Court in the exercise of its original jurisdiction, an a...
Q: Calculating Future Values Assume you deposit $1,000 today in an account that pays 8 percent interest...
A: The future value (FV) is the amount of money at some future time given a particular interest rate an...
Q: 15–4. (Adjusting a firm's capital structure) Curley’s Fried Chicken Kitchen operates two southern-co...
A: We know that Debt Ratio is the ratio of Total debt to total asset. here total debt includes short te...
Q: You are comparing two investments. The first pays 3 percent interest per month, compounded monthly, ...
A: a) i) First investment: Rate of interest i =3% per month Number of compounding periods in one half y...
Q: 2. Calculating Future Välues ture value: L01 Present Value Years Interest Rate Future Value 13% $ 2,...
A: Future value can be calculated using the formula given below Future Value = P0 x (1+r)^n Here P0 = P...
Q: In certain cases, experience will indicate the best time to perform certain operations to maintain e...
A: Answer - Part 1 - Calculation of Cost per piece - ( 200 pieces) Particular Amount Piece pro...
Q: Which is TRUE? S1-Only the legislative body can exercise power to levy S2 - Only the executive depar...
A: The power to levy tax is generally exercised by governmental bodies or legislative bodies. In countr...
Q: Proposal I Automated Machine 250,000 5 years 180,000 60,000 14,000 25,000 Proposal II Ordinary Mac 8...
A: Given information : Year Proposal 1 Proposal 2 0 250000 80000 1 81000 10000 2 81000 10000 ...
Q: Goliath Corp. just paid an annual dividend of $5.40 per share. The dividend growth rate is 5.5 perce...
A: Annual dividend (D0) = $5.40 Growth rate (g) = 5.5% Tax rate = 21% Stock price (P0) = $58.50
Q: Given the data and hints, Project Zeta's initial investment is and its NPV is (rounded to the neares...
A: Net Present Value: It is computed by reducing the initial investment from the sum of present-worth c...
Q: A man loans $4,000 at one interest rate and $5,000 at a 1% greater rate. The $5,000 loan earns $110 ...
A: Let the interest rate for $4000 = r Interest rate for $5000 = r + 0.01
Q: Calculating the Number of Periods You've been offered an investment that will pay you 7 percent per ...
A: We know, Future value = Present value x (1+r) ^ t where, r= periodic interest rate t = number of pe...
Q: Berman V. Parker is planning to borrow ₱10 Million from NBA Bank, which offers to lend the money at ...
A: Amount to be borrowed (A) = P 10 million Discount rate (i) = 10%
Q: A nail salon received an invoice from a supplier for $1400 dated September 19 with terms 5/10, 2/20,...
A:
Q: Kames Bhd and Vaish Bhd operate their businesses within the same industry, the inherent business ris...
A: Earning Per Share: It is used to estimate company's value and is calculated by dividing net profit w...
Q: On January 7, 2021, Dang Company discounted its own P100,000, 180-day note at the Bank of the Philip...
A: Effective Interest rate is the interest rate on a loan or borrowing calculated from the nominal inte...
Q: How long will the given principal P take to reach the aiven maturity value A at the given simple int...
A: 1. Calculate the time (T) taken for the principal to reach the maturity value by equating the amount...
Q: A firm is considering an investment opportunity. At a discount rate of 10%, the project has a positi...
A: IRR = Lower Interest rate + (Higher Interest rate - Lower Interest rate) * Lower NPV / (Higher NPV -...
Q: Andrew has been an astute investor. He has set aside ksh 10 million to be invested in USA at a rate ...
A:
Q: Maybepay Life Insurance Co. is selling a perpetual annuity contract that pays $3,500 monthly. The co...
A: Value of Annunity or current selling price is $338,000 Monthly payment is $3,500 To Find: Interest ...
Q: Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) ...
A: Net present value = Present value of cash flows - Initial investment
Q: E Activity # 2 Find the future value and present value of the annuity due. No. Principal Rate Mode o...
A: Given:
Q: fine agency relationship. Briefly describe agency problems, agency costs and incentives do managers ...
A: Agency relationship is very common problem in organization type of structure and very prominent thin...
Q: Cool Pool has these costs associated with production of 24,000 units of accessory products: direct m...
A: Under the variable costing method, only variable costs are considered to be cost of production. Unde...
Q: The firm is formed to purchase and operate a vehicle. The purpose of the vehicle is to operate a ta...
A: Here, Vehicle acquisition cost is $ 30,000 Years of useful life (economic life) is1 Tax rate is 20%...
Q: What will $205,000 grow to be in 7 years if it is invested today in an account with an annual intere...
A: Investment amount (PV) = $205,000 Interest rate (r) = 12% Period (n) = 7 Years
Q: Communications does not currently pay a dividend. You expect the company to begin paying a dividend ...
A: Price of stock can be determined from the constant growth dividend model considering the growth rate...
Q: how much will be in the account at the end of the 20years?
A: Future Value: It is the future worth of the present annual cash flow stream and is computed by compo...
Q: You wish to make 4 equal annual deposits into a savings account such that at the time of your last d...
A:
Q: ive 1 example of maturity value and explain in 5 sentences when and where to apply this.
A: In financial transaction each and every security have some value based on interest rate and that is ...
Q: (Analyzing coverage ratios) (Related to Checkpoint 15.1 on page 502) The income statements for Home ...
A: $ thousands 2016 2015 2014 Net operating income (EBIT) $ 1,17,74,000.00 $ 1,04,69,000.00 $ 9...
Q: A washer-dryer combination can be purchased from a department store by making monthly credit card pa...
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for yo...
Q: 15–10. (Analyzing coverage ratios) The income statements for Lowe's Companies, Inc. (LOW), spanning ...
A: Interest Earned Ration is the ratio which is calculated with the help of Operating Income which is d...
Q: Explain the following terms in the Capital Asset Pricing Model (CAPM): 1. Risk-Free Rate 2. Beta ...
A: The Capital Asset Pricing Model is a mathematical model that expresses the relationship between a se...
Q: QUESTION 5 What is the amount in the account that Compounds Continuously after one year?
A: Future value of deposit depends on the interest and period of deposit and there is more compounding ...
Q: The Present Value of an Ordinary Annuity is identical to the Present Value of an Annuity Due. This s...
A: The present value is the value of cash flow stream or the fixed lump sum amount at time 0 or the cur...
Q: Win Corporation is considering the purchase of wood cutting equipment. Data on the equipment are as ...
A: Under straight line depreciation, equal amount is being charged as depreciation in every year of ass...
Q: At present, a foundation who has 6 million deposit in bank with interest of 10% compounded annually,...
A: Present value(PV) Present value is resulted when future value is discounted back to present using ...
Q: A company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs....
A: Net Present Value is the difference between the present value of cash inflows and present value of c...
Q: How does the value of a share of stock relate to dividends ?
A: Shares of stocks are the securities issued by the companies to arrange the funds. Companies pay divi...
Q: At the present time, Water and Power Company (WPC) has 20-year noncallable bonds with a face value o...
A: Yield to maturity or YTM is also known as yield till maturity which refers as the return of the bond...
Q: ABC company has expected cash flows of $100,000 from local business and 1 million JPY from business ...
A: Exchange rate refers to a rate at which one unit of currency can be exchanged with another unit of c...
Q: A fishing pond entrepreneur has a plan to build and needs money through a loan with a bank interest ...
A:
Q: The firm is considering a project which requires a $5,000 investment and is expected to generate exp...
A:
Q: 1. Ati= 10% per year and a loan amount of $10,000. If N = 20, what are the payments and future value...
A: Loan is a value which is borrowed from external sources like banks and this amount is repaid later i...
Q: Assume you expect a company’s net income to remain stable at $3500 for all future years, and you exp...
A: The Capital asset pricing Model is widely used for estimating the cost of equity. The CAPM formula i...
Q: JJ Industries will pay a regular dividend of $2.90 per share for each of the next four years. At the...
A: A model that helps to evaluate the value of the stock by discounting the dividend earned on the stoc...
Alto and Tenor have 17,400 shares of stock outstanding at a market price of $27 per share. The firm also has $140,000 of 6.2 percent bonds outstanding that are selling at par. The firm does not expect to pay taxes for the foreseeable future. The
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Paradise Travels is an all-equity firm that has 9,000 shares of stock outstanding at a market price of $27 a share. Management has decided to issue $25,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 7.3 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.Refi Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt-equity ratio is expected to rise from 30 percent to 50 percent. The firm currently has $2.7 million worth of debt outstanding. The cost of this debt is 9 percent per year. The firm expects to have an EBIT of $1.26 million per year in perpetuity and pays no taxes. a. What is the market value of the firm before and after the repurchase announcement? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the expected return on the equity of an otherwise identical all-equity firm? (Do not round intermediate calculations and…Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,260 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,260 worth of stock. Ignore taxes. Liabilities and Assets Equity $ 7,200 Fixed assets 29,300 Debt $11,300 25,200 Cash Equity a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $25,500 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $25,500 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $25,500 a year, find the price-earnings ratio if the…
- An unlevered firm has expected earnings of $2,401 and a market value of equity of $19,600. The firm is planning to issue $4,000 of debt at 6 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?An all-equity firm has expected earnings of $14,200 and a market value of $82,271. The firm is planning to issue $15,000 of debt at 6.3 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…
- Refi Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt-equity ratio is expected to rise from 35 percent to 50 percent. The firm currently has $3.1 million worth of debt outstanding. The cost of this debt is 8 percent per year. The firm expects to have an EBIT of $1.3 million per year in perpetuity and pays no taxes. a. What is the market value of the firm before and after the repurchase announcement? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the expected return on the equity of an otherwise identical all-equity firm? (Do not round intermediate calculations and…Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…Gamma Industries has net income of $1,100,000, and it has 1,355,000 shares of common stock outstanding. The company's stock currently trades at $35 a share. Gamma is considering a plan in which it will use available cash to repurchase 30% of its shares in the open market at the current $35 stock price. The repurchase is expected to have no effect on net income or the company's P/E ratio. What will be its stock price following the stock repurchase? Do not round intermediate calculations. Round your answer to the nearest cent.
- A firm has no debt outstanding and a total market value of $938,080. Earnings before interest and taxes, EBIT, are projected to be $118, 600. The company is considering a $205,920 debt issue with an interest rate of 8.25%. The proceeds will be used to repurchase 7200 shares of stock. There are currently 32,800 shares outstanding. Ignore taxes for this problem. What is the EPS on the firm after the additional debt is taken on? A) 3.62 B) 4.56 C) 3.10 D) 3.97 E) 4.37Beta Industries has net income of $2,000,000 and it has 1,000,000 shares of common stock outstanding. The company’s stock currently trades at $32 a share. Beta is considering a plan in which it will use available cash to repurchase 20% of its shares in the open market. The repurchase is expected to have no effect on either net income or the company’s P/E ratio. What will be its stock price following the stock repurchase?The common stock and debt of Northern Sludge are valued at $58 million and $42 million, respectively. Investors currently require a 16.9% return on the common stock and a/an 6.8% return on the debt. If Northern Sludge issues an additional $22 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern’s debt and that there are no taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to two decimal places.)