Sharify Inc uses bond, common, and preferred shares to finance their operations. 1,000 bonds with a 6.5% semi-annual coupon rate, the bond is priced to have a YTM of 6% (semi-annually compounded APR) with 6 years left to maturity. 39,000 shares of common stock with a market value of $65 per share. The beta for Sharify Inc. common stock is 1.8. 5,000 shares of preferred stock that have a 7% dividend yield. The shares have a market value of $49 per share, and a face value of $100. Suppose the average return on a 10-year Canadian government bond is 3.9%, and the return on the TSX Composite Index i 9.3%. What is the current price of the bond? What is Sharify Inc.'s WACC? Assume the tax rate is 32 %
Q: An investor is in the 24% tax bracket and lives in a state with no income tax. He is trying to…
A: A corporate bond is like an IOU (I Owe You) issued by a company to get money from investors. It's a…
Q: Selected comparative financial statements of Korbin Company follow. KORBIN COMPANY Comparative…
A: The objective of the question is to calculate the common-size percentages for the income statement…
Q: Oxford Company has limited funds available for investment and must ration the funds among four…
A: ProjectInvestment Required (i)Present value of Cash Inflows (ii)profitability index…
Q: What is the weighted-average cost of capital for SKYE Corporation given the following information?…
A: The weighted average cost of capital is the average rate that a company expects to pay to finance…
Q: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio…
A: When an investor engages in the investment of two or more assets rather than one single asset to…
Q: Laurence and Amanda Booth are considering buying a house in Scarborough. Their combined gross income…
A: Current expensesCar loan payment: Furniture loan payment: $900Total current expenses: $923.84 + $900…
Q: Consider a coupon bond that has a par value of $900 and a coupon rate of 6%. The bond is currently…
A: YTM is also known as Yield to maturity. It is a capital budgeting technique which helps in decision…
Q: Consider a four-year project with the following information: Initial fixed asset investment =…
A: Sensitivity analysis helps to determine that how sensitive values are with respect to change in…
Q: You can afford a $1400 per month mortgage payment. You've found a 30 year loan at 8% interest. a)…
A: Monthly payment =$1400Period of the loan = 30 yearsInterest rate = 8% per annum
Q: A call option on Canadian dollar has a strike (exercise) price of $0.75 per CAD. The present CAD…
A: The intrinsic value of a call option is the difference between the current market price of the…
Q: The current price of a non-dividend-paying biotech stock is $140 with a volatility of 25%. The…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Consider a bond with a $1,000 par value, 8% annual coupon, 10 years to maturity, with an interest…
A: Duration of bond = Present value of cash flow/ bond price
Q: The Florida Investment Fund buys 98 bonds of the Gator Corporation through a broker. The bonds pay…
A: Valuation of bond can be determined by calculating the present value of future cash flows or…
Q: A project that provides annual cash flows of $22,500 for 7 years costs $84,000 today. a. If the…
A: >Capital budgeting entails determining which projects are financially feasible and which are…
Q: Tippy Toe Spa Company offers various services, such as facials, laser hair removal and…
A: An asset's useful life refers to the period up to which the asset is expected to work in a proper…
Q: Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect…
A: Cost of equity as per CAPM=risk free rate +Beta*(Market rate- risk-free rate )Cost of equity as per…
Q: Bing Enterprises, Inc., has been considering the purchase of a new manufacturing facility for…
A: Making decisions about capital budgeting entails assessing and choosing capital expenditures or…
Q: WACC. Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt…
A: > Given the debtAmountcostWendy46907%Bebe46139%Shelly242715%
Q: Using the data in the following table, and the fact that the correlation of A and B is 0.48,…
A: YearStock AStock B2008-10%21%200920%30%20105%7%2011-5%-3%20122%-8%20139%25%Expected Return of…
Q: What is the IRR of the following set of cash flows? Year 0 123 Cash Flow -$ 8,213 4,800 3,300 3,700…
A: The IRR of the project refers to the measure of the profitability of the project calculated by…
Q: You have determined in your mind that you would like to have a business of your own, although your…
A: NPV (Net Present Value): The difference between the present value of cash inflows and the present…
Q: A bond with a coupon rate of 9 percent sells at a yield to maturity of 11 percent. If the bond…
A: Here,Time to Maturity is 12 YearsCoupon Rate is 9%Yield to Maturity is 11%
Q: What is the annual operating free cash flow if operating revenues increase by $1.2 million,…
A: Operating Cash flow is the amount which is earned by the investor from the project. It is the net…
Q: Due to demographics and increasing awareness about the potential dangers of smoking, PuffOff, a…
A: Dividend for Year 1 = d1 = $2.15Growth Rate for Year 2 = g2 = -11%Growth Rate for Year 3 = g3 =…
Q: A bank client has a debt of 12,425 pesos including interest to be paid in 12 months. The debtor…
A: In simple interest loans are paid by payment of simple interest on loan and there is no compounding…
Q: Tom Cruise Lines Incorporated issued bonds five years ago at $1,000 per bond. These bonds had a…
A: >Please refer to the spreadsheet below for calculation and answer. Cell reference is also…
Q: You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10%…
A: A company's average after-tax cost of capital from all sources, including common stock, preferred…
Q: You have been given the following return information for a mutual fund, the market index, and the…
A: The variables that are used in risk analysis for an investment using the excess returns and the…
Q: Galaxy Corp. has to choose between two mutually exclusive projects. If it chooses project A, Galaxy…
A: NPV can be calculated by following function in excel=NPV(rate,value1,[value2],…) + Initial…
Q: As an active fund manager, you have obtained information on three individual stocks, the market…
A: Weighted average = expected return / standard deviation.Stock 1=20/80∗100.=25%.Stock…
Q: To calculate the after - tax cost of debt, multiply the before - tax cost of debt by(1-T). Water and…
A: Interest rate = 7.30%Tax rate = 25%WPC's after-tax cost of debt is
Q: If you put up $31,000 today in exchange for a 5.25 percent, 15-year annuity, what will the annual…
A: Annuity refers to a series of cash flows occurring on a periodic basis. Here the amount of $31,0000…
Q: Spherical Manufacturing recently spent $19 million to purchase some equipment used in the…
A: Net present value is one of the best methods of evaluating a project wherein the project is accepted…
Q: Calculate the initial outlay and depreciable value of the project. Calculate the annual after-tax…
A: The annual after-tax operating cash flow is the net cash produced by a company's activities after…
Q: Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: You are considering an investment in Fields and Struthers, Inc., and want to evaluate the firm's…
A: The objective of the question is to calculate the NOPAT operating cash flow, NOPAT investment in…
Q: Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's…
A: In this question, we are required to determine the best guess for the cost of equity based on…
Q: Molin Inc. is considering to a project that will have the following series of cash flow from assets…
A: Cash flow for Year 0 = cf0 = -1580.92Cash flow for Year 1 = cf1 = 453Cash flow for Year 2 = cf2 =…
Q: An investment project has annual cash inflows of $4,900, $3,400, $4,600, and $3,800, for the next…
A: Discounted payback period is an important capital budgeting metric. It is an improvement of the…
Q: Matt is saving to buy a new motorcycle. If he deposits $70 at the end of each month in an account…
A: Here,ParticularsValuesMonthly deposits (PMT) $ 70.00Interest rate5.50%Number of compounding…
Q: If the levered firm has $3000000 in debt and a tax rate of 30%, what is the value of the levered…
A: The value of leverage refers to the impact of using debt or financial leverage on the overall value…
Q: James Furnishings generated $2 million in sales during 2016, and its year-end total assets were $1.5…
A: Sales Increase without External Funding: The amount by which a company can increase its sales using…
Q: You finance a $200, 000 thirty year mortgage on which you agree to make monthly annuity payments.…
A: Annuity refers to a series of cash flows that occurs on a periodic basis. Here the mortgage will be…
Q: Kelly Malone plans to have $40 withheld from her monthly paycheck and deposited in a savings account…
A: Compound = Monthly = 12Payment = p = $40Interest Rate = i = 12 / 12 = 1%Time = n = 2.5 * 12 = 30
Q: A factoring company discounts a client a document with a maturity value of 40,000 at a discount rate…
A: In this question, we are required to determine the profit obtained by the factoring company.
Q: nowing Examples ded. Show your steps. A $1,000 par value bond with 12 years to maturity pays a…
A: Price of a bond is the present value of coupon payments plus the present value of the par value of…
Q: Sunland Railroad Co. is about to issue $320,000 of 6-year bonds paying an 11% interest rate, with…
A: One kind of security is a bond. Securities are financial tools that signify ownership in a business…
Q: The company is considering a project involving the purchase of new equipment. Cost of equipment…
A: Net present value (NPV) refers to the capital budgeting technique that uses time value of money to…
Q: Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm…
A: Exchange Ratio of SharesThe exchange ratio of shares refers to the proportion at which one company’s…
Step by step
Solved in 3 steps with 5 images
- Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: Market: 8,600 7.2 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 107. These bonds pay interest semiannually and have a par value of $2,000. WACC 285,000 shares of common stock selling for $65.70 per share. The stock has a beta of 1.02 and will pay a dividend of $3.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. 9,200 shares of 4.6 percent preferred stock selling at $95.20 per share. The par value is $100 per share. 10.8 percent expected return, risk-free rate of 4.2 percent, and a 22 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. %You are given the following information on Parrothead Enterprises: Debt: 8,500 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 106.75. These bonds pay interest semiannually and have a par value of $2,000. Common stock: 280,000 shares of common stock selling for $65.60 per share. The stock has a beta of 1.06 and will pay a dividend of $3.80 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 9,100 shares of 4.55 percent preferred stock selling at $95.10 per share. The par value is $100 per share. Market: 10.9 percent expected return, risk-free rate of 4.15 percent, and a 21 percent tax rate. Calculate the company's WACC.
- You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: 9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5 . These bonds pay interest semiannually and have a par value of $1,000. 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .96 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Market: 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The par value is $100 per share. 11.4 percent expected return, risk-free rate of 3.9 percent, and a 21 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimalYou are given the following information on Parrothead Enterprises: Debt: 9,400 6.6 percent coupon bonds outstanding, with 21 years to maturity and a quoted price of 105. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 245,000 shares of common stock selling for $64.90 per share. The stock has a beta of .94 and will pay a dividend of $3.10 next year. The dividend is expected to grow by 5.4 percent per year indefinitely. Preferred stock: 8,400 shares of 4.7 percent preferred stock selling at $94.40 per share. The par value is $100 per share. Market: 11.6 percent expected return, risk-free rate of 3.8 percent, and a 24 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.You are given the following information concerning Parrothead Enterprises: Debt: 9,200 6.4 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 104.50. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 235,000 shares of common stock selling for $64.70 per share. The stock has a beta of .92 and will pay a dividend of $2.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. Preferred stock: 8,200 shares of 4.60 percent preferred stock selling at $94.20 per share. Market: 11.8 percent expected return, a risk-free rate of 3.70 percent, and a 22 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt % Cost of preferred stock % Cost of equity % Calculate the WACC for the company. (Do not round intermediate calculations and enter your answer as a…
- You are given the following information on Parrothead Enterprises: Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of .93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. The par value is $100 per share. Market: 11.7 percent expected return, risk-free rate of 3.75 percent, and a 23 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %You are given the following information on Parrothead Enterprises: Debt: 9,200 7.3 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 108.5. These bonds pay interest semiannually and have a par value of $2,000. Common stock: 315,000 shares of common stock selling for $66.30 per share. The stock has a beta of 1.08 and will pay a dividend of $4.50 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 9,800 shares of 4.65 percent preferred stock selling at $95.80 per share. The par value is $100 per share. Market: 10.2 percent expected return, risk - free rate of 4.5 percent, and a 23 percent tax rate. Calculate the company's WACC.You are given the following information concerning Parrothead Enterprises: Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of .93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. Market: 11.7 percent expected return, a risk-free rate of 3.75 percent, and a 23 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
- You are given the following information on Parrothead Enterprises: Debt: 9,500 7 percent coupon bonds outstanding, with 25 years to maturity and a quoted price of 105.25. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 250,000 shares of common stock selling for $65.00 per share. The stock has a beta of .95 and will pay a dividend of $3.20 next year. The dividend is expected to grow by 5 percent per year indefinitely. Preferred stock: 8,500 shares of 4.5 percent preferred stock selling at $94.50 per share. The par value is $100 per share. Market: , 11.5 percent expected return, risk - free rate of 3.85 percent, and a 25 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g ., 32.16. WACC % You are given the following information on Parrothead Enterprises: Debt: Common stock: 9,500 7 percent coupon bonds outstanding, with 25 years to maturity and…Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It pays annual coupon payments and has a coupon rate of 3%. The bonds will mature in 20 years. Stock price of Firm Z is $10, and there are 50 million shares outstanding. There are 2 million shares of preferred stock, which offers $2 dividend and is priced at $40. Equity beta of Firm Z is 1.5 and current market portfolio yields 8% and the risk free rate is 2%. Corporate tax rate is 30%. What is the following: 1. costs of debt, 2.equity, 3. preferred stock and WACC?Firm Z has issued 1,000,000 bonds. Each bond is priced at $929 and has a face value of $1000. It pays annual coupon payments and has a coupon rate of 3%. The bonds will mature in 20 years. Stock price of Firm Z is $10, and there are 50 million shares outstanding. There are 2 million shares of preferred stock, which offers $2 dividend and is priced at $40. Equity beta of Firm Z is 1.5 and current market portffolio yields 8% and the risk free rate is 2%. Corproate tax rate is 30%. Find the costs of debt, equity, preferred stock and WACC. Firm Z has invested $4 million in marketing campaign to assess the demand for the product Minish. This product will be in the market next year and will last five years. Revenues are projected to be $50 million per year along with expenses of $20 million. The firm spends $15 million immediately on equipment that will be depreciated using MACRS depreciation to zero. Additionally, it will use some fully depreciated existing equipment that has a market…