Monroe Inc. is an all-equity firm with 500,000 shares outstanding.  It has RM2,000,000 of EBIT, and EBIT is expected to remain constant in the future.  The company pays out all of its earnings, so earnings per share (EPS) equal dividends per shares (DPS), and its tax rate is 40%.  The company is considering issuing RM5,000,000 of 9.00% bonds and using the proceeds to repurchase stock.  The risk-free rate is 4.5%, the market risk premium is 5.0%, and the firm's beta is currently 0.90.  However, the CFO believes the beta would rise to 1.10 if the recapitalization occurs.  Assuming the shares could be repurchased at the price that existed prior to the recapitalization, what would the price per share be following the recapitalization?  (Hint:  P0 = EPS/rs because EPS = DPS.)

Mitsui Ltd has 1 million issued shares and expects unlevered after-tax cash flows of $300,000 every year, forever. The company is all-equity financed, and its cost of capital is 12% p.a. The company's tax rate is 30%. The company has just announced its intention to borrow an additional $1,400,000 of perpetual debt (at a 7% p.a. interest rate) and use the proceeds to repurchase shares? a) Calculate the price per share of Mitsui Ltd immediately before the repurchase announcement. b) Calculate the price of a share in Mitsui Ltd immediately after the repurchase announcement but before the new borrowings occur (assuming that the market expects repurchase to occur with certainty and that there are no other information effects).  c) Calculate the cost of equity capital for Mitsui Ltd after the share repurchase (ignoring other information effects).

Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $2.75 dividend per share (DO $2.75). The stock's price is currently $ 28.00, its dividend is expected to grow at a constant rate of 8% per year, its tax rate is 25%, and its WACC is 13.85%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places. % olo

The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 7% andthe firm's tax rate is 21%. What is the company's WACC? (Don't round intermediate calculations, enter final answers as a percent rounded to 2 decimal places.)