Last month, corporations supplied $250 billion in one-year discount bonds to investors at an average market rate of 12%. This month, an additional $50 billion in one-year discount bonds became available, and market rates increased to 13%. Assuming that the demand curve remained constant, what is the slope of the equation.

Your company has a 34% tax rate and has $510 million in assets, currently financed entirely with equity. Equity is worth $41.00 per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below: State Recession Average Boom   Probability of State .25 .55 .20   Expect EBIT in State $60 million $110 million $180 million The firm is considering switching to a 15-percent debt capital structure, and has determined that they would have to pay a 11 percent yield on perpetual debt in either event. What will be the level of expected EPS if they switch to the proposed capital structure? (Round your intermediate calculations and final answer to 2 decimal places except calculation of number of shares which should be rounded to nearest whole number.)

On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $25 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt.   Debt $30,000,000 Common equity 30,000,000 Total capital $60,000,000   New bonds will have an 9% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is $1.20, so $1.20/$30 = 4%.) The marginal corporate tax rate is 35%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.     Open spreadsheet     In order to maintain the present capital structure, how much of the…

Now (use the following information) suppose that: The cost of debt (ra) is 3.875% (before tax), • Flotation costs (F) = 7% of issue price, The debt is trading at $1,025.00, There are 7,250 bonds outstanding, • The tax rate is .35, The LAST dividend paid yesterday (Do) = $4.56, The expected constant growth rate (g) = 2.75%, Beta = 1.55, TRF = 1.14%, = 4.5%, (market risk premium) The firm has 250,000 shares of common stock outstanding, Common stock shares are trading at $47.32/share (Po). RPm Given the above information, what is the Market value of the firm's debt? $. Given the above information, what is the Market value of the firm's equity? $. Now calculate the weight of debt for the firm (Wa). You will use this to calculate the WACC. Now calculate the weight of equity for the firm (Wee). You will use this to calculate the WACC. What is the cost of existing common equity (retained earnings)? (Briefly describe your approach/method as well as your answer) What is the cost of NEW common…

According to equity analysts at Goldman Sachs, over the next year, there is a 13% chance of an economic boom and a 75% likelihood of a normal economy. You just bought shares of Time Warner (ticker symbol: TWX) that are expected to earn 14% in a booming economy and 8% in a normal economy. What is Time Warner’s expected return if the company is expected to lose 4% in a recessionary economy? a. 7.69   b. 7.34   c. 6.43   d. 4.00   e. 8.30

A company is projected to generate revenues of $336 million and $406 million over the next two years. After that, the company is assumed to enter its terminal phase with steady growth. Given the following information, how much is each share worth today? Answer in dollars rounded to one decimal place. Forecasted operating margin: 35.4%. Forecasted tax rate: 22.2%. Forecasted reinvestment rate: 30%. Forecasted steady growth rate of free cash flow: 1.3% per year. Cost of capital: 13.2%. Debt: $40 million. Cash: $35 million. Shares outstanding: 12 million.

Assume that you are on the financial staff of Jerry Inc., and you have collected the following data: The yield on the company's outstanding bonds is 8.75%; its tax rate is 40%; the next expected dividend is $0.75 a share; the dividend is expected to grow at a constant rate of 7.00% a year; the price of the stock is $15.00 per share; and the target capital structure is 40% debt and 60% common equity. What is the firm's WACC? 9.04% 9.80% 8.44% O7.64% 9.30%

Company Z hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The company's noncallable bonds mature in 20 years, have a coupon rate of 5.00% paid annually, a par value of $1,000, and a current market price of $850. (2) The company's tax rate is 25%. (3) The required rate of return on the company's common stock based on CAPM is 10.0%. (4) The target capital structure consists of 30% debt, with the remainder comprised of common equity. What is its WACC? Group of answer choices 7.48% 7.58% 8.43% 8.90% 6.33%

Your firm has an ROE of 12.1%​, a payout ratio of 27%​, $594,200 of​ stockholders' equity, and $386,100 of debt. If you grow at your sustainable growth rate this​ year, how much additional debt will you need to​ issue?

The company you work for wants you to estimate the company’s WACC; but before you do so, you need to estimate the cost of debt and equity. You have obtained the following info. 1) the firms non-callable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000 and a market price of $1,225.00. 2) the company’s tax rate is 40%. 3)the risk-free rate is 4.50%, the market risk premium is 5.50%, and the stocks beta is 1.20. 4) the target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any common stock. WHAT is the WACC?