BHP Billiton, An Australian company’s stock, has a beta of 0.90. The expected return on the market is 10.50 per cent, and Treasury bills are yielding 3.40 per cent.  Further, the company has a debt issue outstanding with 23 years to maturity that is quoted at 120 per cent of face value. The issue makes semiannual payments and has an embedded cost of 6 per cent annually. It considers a debt-equity ratio of 0.60 and a 22 per cent corporate tax rate. In this year, the company has an EBIT of $3.15 million. Depreciation, the increase in net working capital, and capital spending were $265,000, $105,000, and $495,000, respectively. You expect that over the next five years, EBIT will grow at 15 per cent per year, depreciation and capital spending will grow at 20 per cent per year, and NWC will grow at 10 per cent per year. It also has $19.5 million in debt and 400,000 shares outstanding. After Year-5, the adjusted cash flow from assets is expected to grow at 3.50 per cent indefinitely.    What is the value of the company ($)?     What is the price per share ($)?

Suppose two firms want to borrow money from a bank for a period of one year. Firm A has excellent credit, whereas Firm B’s credit standing is such that it would pay prime + 3 percent. The current prime rate is 6.55 percent, the 30-year Treasury bond yield is 4.30 percent, the three-month Treasury bill yield is 3.47 percent, and the 10-year Treasury note yield is 4.23 percent. Now suppose that Firm B decides to get a term loan for 10 years. What is the loan rate for the firm? Firm B's loan rate     % How does this affect the company’s borrowing cost? Company's borrowing cost will     (increase/ remain the same / decrease)                                                         .

BHP Billiton, An Australian company's stock, has a beta of 0.80. The expected return on the market is 12 per cent, and Treasury bills are yielding 3,40 per cent. Further, the company has a debt issue outstanding with 15 years to maturity that is quoted at 65 per cent of face value. The issue makes semiannual payments and has an embedded cost of 6 per cent annually, It considers a debt-equity ratio of 0.80 and a 25 per cent corporate tax rate. In this year, the company has an EBIT of $3.15 million. Depreciation, the increase in net working capital, and capital spending were $265,000, $105,000, and $495,000, respectively. You expect that over the next five years, EBIT will grow at 15 per cent per year, depreciation and capital spending will grow at 20 per cent per year, and NW will grow at 10 per cent per year, It also has $19.5 million in debt and 400,000 shares outstanding, After Year-5, the adjusted cash flow from assets is expected to grow at 3.50 per cent indefinitely, Answer the…

BHP Billiton, an Australian company, just paid $0.85 as a dividend, which is expected to grow at 5.0 per cent. Its most recent stock price is $72. Further, the company has a debt issue outstanding with 23 years to maturity that is quoted at 60 per cent of face value. The issue makes semiannual payments and has an embedded cost of 6 per cent annually. It considers a debt-equity ratio of 0.60 and a 22 per cent corporate tax rate. This year, the company has an EBIT of $3.15 million. Depreciation, the increase in net working capital, and capital spending were $265,000, $105,000, and $495,000, respectively. Therefore, you expect that over the next five years, EBIT will grow at 15 per cent per year, depreciation and capital spending will grow at 20 per cent per year, and NWC will grow at 10 per cent per year. It also has $19.5 million in debt and 400,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.50 per cent indefinitely. Answer the…