Spam Corp. is financed entirely by common stock and has a beta of 1.0. The firm is expected to generate a level, perpetual stream of earnings and dividends. The stock has a price–earnings ratio of 8 and a cost of equity of 12.5%. The company’s stock is selling for $50. Now the firm decides to repurchase half of its shares and substitute an equal value of debt. The debt is risk-free, with an interest rate of 5%. The company is exempt from corporate income taxes. Assume MM are correct. Calculate the cost of equity after the refinancing. Calculate the overall cost of capital (WACC) after the refinancing. (Enter your answer as a percent rounded to 1 decimal place.) Calculate the price–earnings ratio after the refinancing. Calculate the stock price after the refinancing. Calculate the stock’s beta after the refinancing.
Answers: 3
Business, 22.06.2019 05:20
Carmen co. can further process product j to produce product d. product j is currently selling for $20 per pound and costs $15.75 per pound to produce. product d would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. what is the differential revenue of producing product d?
Answers: 2
Business, 22.06.2019 07:50
Connors academy reported inventory in the 2017 year-end balance sheet, using the fifo method, as $154,000. in 2018, the company decided to change its inventory method to lifo. if the company had used the lifo method in 2017, the company estimates that ending inventory would have been in the range $130,000-$135,000. what adjustment would connors make for this change in inventory method?
Answers: 1
Business, 22.06.2019 23:30
Which statement best describes the two reactions? abcl, + h2 → 2hci2h + h = he + inreaction a involves a greater change, and reaction b involves a change in element identity.reaction b involves a greater change and a change in element identityreaction a involves a greater change and a change in element identity.reaction b involves a greater change, and reaction a involves a change in element identity.
Answers: 1
Business, 23.06.2019 00:00
How did the change in textile production affect employment in spinning and weaving for adults and children?
Answers: 1
Spam Corp. is financed entirely by common stock and has a beta of 1.0. The firm is expected to gener...
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