Global Pistons (GP) has common stock with a market value of $380 million and debt with a value of $245 million Investors expect a 17% return on the stock and a 4% return on the debt. Assume perfect capital markets. a. Suppose GP issues $245 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? b. Suppose instead GP issues $53.63 million of new debt to repurchase stock L. If the risk of the debt does not change, what is the expected return of the stock after this transaction? If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (7 CEED a. Suppose GP issues $245 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? It GP issues $245 milion of new stock to buy back the debt, the expected return is [17%. (Round to two decimal places)

Mackenzie Company has a price of $38 and will issue a dividend of $2.00 next year. It has a beta of 1.3, the risk-free rate is 5.3%, and the market risk premium is estimated to be 5.1%. a. Estimate the equity cost of capital for Mackenzie. b. Under the CDGM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part (a)? a. Estimate the equity cost of capital for Mackenzie. The equity cost of capital for Mackenzie is %. (Round to two decimal places.) b. Under the CGDM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part (a)? The expected growth rate for dividends is %. (Round to two decimal places.)

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Suppose the risk-free rate is 3.91% and an analyst assumes a market risk premium of 6.52%. Firm A just paid a dividend of $1.11 per share. The analyst estimates the β of Firm A to be 1.20 and estimates the dividend growth rate to be 4.27% forever. Firm A has 264.00 million shares outstanding. Firm B just paid a dividend of $1.83 per share. The analyst estimates the β of Firm B to be 0.70 and believes that dividends will grow at 2.86% forever. Firm B has 197.00 million shares outstanding. What is the value of Firm B? Answer format: Currency: Round to: 2 decimal places.

Anle Corporation has a current stock price of $15.42 and is expected to pay a dividend of $0.85 in one year. Its expected stock price right after paying that dividend is $17.47. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? GELEID a. What is Anle's equity cost of capital? Anle's equity cost of capital is% (Round to two decimal places)

You have the following information to determine the per share value of a stock using the free cash flow (FCF) method of valuation: The firm has 1.852 billion shares outstanding. The market value of its debt is $3.192 billion. The free cash flow is currently $1.1559 billion. The firm’s equity beta is 0.90; the equity risk premium is 5.5%; the risk-free rate is 5.5%. The before-tax cost of debt is 7%. The tax rate is 40%. The firm has a capital structure of 75% equity and 25% debt. The FCF rate of growth is 3%. Based on the above information, calculate the following: WACC    Value of the firm (using the WACC as the discount rate)   Total market value of equity    Value per share

Suppose instead of paying a dividend, Payout Corp. announces that it will repurchase stockwith a market value of $10,000. What happens to the stock price when the repurchaseproposal is announced? subpart d needs to be solved

The cost of raising capital through retained earnings is the cost of raising capital through issuing new common stock. The cost of equity using the CAPM approach The current risk-free rate of return (rRFrRF) is 3.86% while the market risk premium is 6.17%. The Burris Company has a beta of 0.92. Using the capital asset pricing model (CAPM) approach, Burris's cost of equity is The cost of equity using the bond yield plus risk premium approach The Taylor Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Taylor's bonds yield 11.52%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 4.95%. Based on the bond-yield-plus-risk-premium approach, Taylor's cost of internal equity is: 16.47% 19.76% 18.12% 15.65% The cost of eguity usina the discOunted.cash flow for dividend.aroutb) approach

Using the equity asset valuation model (CAPM) equation, determine the required return for the shares of the following companies, if the market return is 7.50% (Rm = 7.50%) and the risk-free asset return is 1.25% (RF = 1.25%). You must show all counts. Stock Beta SKT 0.65 COST 0.90 SU 1.42 AMZN 1.57 V 0.94

Assume​ Evco, Inc. has a current stock price of $50.92 and will pay a $2.20 dividend in one​ year; its equity cost of capital is 18%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current​ price? We can expect Evco stock to sell for ​$_____.  ​(Round to the nearest​ cent.)