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a company has 9 million shares of common stock out...

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a company has 9 million shares of common stock outstanding and 120,000 8.5% semiannual bonds outstanding, par value of $1,000 each. The common stock currently sells at $34 a share and beta of 1.2, the bonds have 15 years to maturity and seel for 93% of par. Market risk premium is 10%, Tbills are yielding 5% and the tax rate of the company is 35%. What is the firms market value capital structure (D/V and E/V) If they evaluate a new investment project that has the same risk as the firm's typical project, what rate should it use to discount the cash flows? I am having a hard time figuring out what formulas to use since the problem has many componenets. Can y ou help me break it down so that I can understand the moves I need to make? Thanks, Katie

 

Paper#5393 | Written in 18-Jul-2015

Price : $25
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