You have been asked to estimate the value of General Communications, a telecomm firm. General Communications has a debt to capital ratio of 30%, a beta of 1.10 and a pre-tax cost of debt of 7.5%. The firm had earnings before interest and taxes of $ 600 million in 2020 (fiscal year end is March 31, 2020), after depreciation charges of $300 million. The firm had capital expenditures of $360 million, and non-cash working capital increased by $50 million during 2016. The firm also had a book value of capital of $ 2 billion at the beginning of 2019 fiscal year. (The Treasury bond rate is 5%, the market risk premium is 6.3% and the firm has a tax rate of 40%). Assuming that the firm is in stable growth, and that the return on capital and reinvestment rates from 2019 can be sustained forever.     Estimate the value of the firm at the beginning of 2020 fiscal year.

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following​ weights: 30​% ​long-term debt, 10​% preferred​ stock, and 60​% common stock equity​ (retained earnings, new common​ stock, or​ both). The​ firm's tax rate is 23​%.   Debt : The firm can sell for ​$1030 a 14​-year, ​$1,000​-par-value bond paying annual interest at a 8.00​% coupon rate. A flotation cost of 2​% of the par value is required.   Preferred stock: 9.00​% ​(annual dividend) preferred stock having a par value of ​$100 can be sold for ​$92.An additional fee of​ $2 per share must be paid to the underwriters.   Common stock: The​ firm's common stock is currently selling for ​$90 per share. The stock has paid a dividend that has gradually increased for many​ years, rising from ​$2.00 ten years ago to the ​$3.26 dividend​ payment, D0​, that the company just recently made.…

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following​ weights: 30​% ​long-term debt, 10​% preferred​ stock, and 60​% common stock equity​ (retained earnings, new common�� stock, or​ both). The​ firm's tax rate is 23​%.   Debt : The firm can sell for ​$1030 a 14​-year, ​$1,000​-par-value bond paying annual interest at a 8.00​% coupon rate. A flotation cost of 2​% of the par value is required.   Preferred stock: 9.00​% ​(annual dividend) preferred stock having a par value of ​$100 can be sold for ​$92.An additional fee of​ $2 per share must be paid to the underwriters.   Common stock: The​ firm's common stock is currently selling for ​$90 per share. The stock has paid a dividend that has gradually increased for many​ years, rising from ​$2.00 ten years ago to the ​$3.26 dividend​ payment, D0​, that the company just recently made.…

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following​ weights: 40​% ​long-term debt, 15​% preferred​ stock, and 45​% common stock equity​ (retained earnings, new common​ stock, or​ both). The​ firm's tax rate is 26​%.   Debt The firm can sell for ​$1005 a 13​-year, $1,000​-par-value bond paying annual interest at a 6.00​% coupon rate. A flotation cost of 2.5​% of the par value is required.   Preferred stock  7.00​% (annual dividend) preferred stock having a par value of ​$100 can be sold for ​$98. An additional fee of ​$5 per share must be paid to the underwriters.   Common stock  The​ firm's common stock is currently selling for ​$80 per share. The stock has paid a dividend that has gradually increased for many​ years, rising from ​$2.50 ten years ago to the ​$4.92 dividend​ payment, D0​, that the company just recently made. If…

Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following​ weights: 40​% ​long-term debt, 15​% preferred​ stock, and 45​% common stock equity​ (retained earnings, new common​ stock, or​ both). The​ firm's tax rate is 26​%.   Debt The firm can sell for ​$1005 a 13​-year, $1,000​-par-value bond paying annual interest at a 6.00​% coupon rate. A flotation cost of 2.5​% of the par value is required.   Preferred stock  7.00​% (annual dividend) preferred stock having a par value of ​$100 can be sold for ​$98. An additional fee of ​$5 per share must be paid to the underwriters.   Common stock  The​ firm's common stock is currently selling for ​$80 per share. The stock has paid a dividend that has gradually increased for many​ years, rising from ​$2.50 ten years ago to the ​$4.92 dividend​ payment, D0​, that the company just recently made. If…

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Dyrdek Enterprises has equity with a market value of $1.8 million and the market value of debt is $3.55 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.6 percent. The new project will cost $2.20 million today and provide annual cash flows of $576,000 for the next 6 years. The company's cost of equity is 11.07 percent and the pretax cost of debt is 4.88 percent. The tax rate is 21 percent. What is the project's NPV?

Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet: Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accounts receivable Accrued liabilities Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000

Your company is evaluating a new factory that will cost $14 million to build. Your target debt-equity ratio is 1. The flotation cost for new equity is 7% and the flotation cost for new debt is 4%. The company is planning to use retained earnings for 50% of the equity financing. What are the weighted average flotation costs as a fraction of the amount invested? What are the flotation costs (in $ million )?

In 2024, NovaTech Inc. has long-term debt of $30 million at an average interest rate of 9%. The company's market capitalization is $80 million. If the tax rate is 40% and the cost of equity is 14%, determine the weighted average cost of capital. Note that the company also has a non- operational land asset valued at $5 million and office furniture valued at $500,000. Calculate the after-tax cost of debt for the Summit Medical Group, a for-profit healthcare provider, given the following details: • The coupon rate on its debt is 9 percent. The tax rate is 25 percent. The Summit Medical Group also has a cash reserve of $50,000 and pays a $200 monthly utility bill.