Business, 27.06.2019 02:30, juniorcehand04
F. pierce products inc. is considering changing its capital structure. f. pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows:
market debt to market equity to market debt to before tax cost
value ratio (wd) value ratio (ws) equity ratio (d/s) of debt (rd)
0.0 1.0 0.00 6.0%
0.2 0.8 0.25 7.0
0.4 0.6 0.67 8.0
0.6 0.4 1.50 9.0
0.8 0.2 4.00 10.0
f. pierce uses capm to estimate its cost of common equity, r, and at the time of the analysis the risk free rate is 5%, the market risk premium is 6%, and the company's tax rate is 40%. f. pierce estimates that its beta now (which is "unlevered" because it currently has no debt) is 0.8. based on this information what is the firm's optimal capital structure, and what would be the weighted average cost of capital at the optimal capital structure?
Answers: 2
Business, 22.06.2019 13:30, CristianPaz
Presented below is information for annie company for the month of march 2018. cost of goods sold $245,000 rent expense $ 36,000 freight-out 7,000 sales discounts 8,000 insurance expense 5,000 sales returns and allowances 11,000 salaries and wages expense 63,000 sales revenue 410,000 instructions prepare the income statement.
Answers: 2
Business, 22.06.2019 20:00, jaylennkatrina929
Which of the following is a competitive benefit experienced by the first mover firm in an industry? a. the first mover will be able to achieve a less steep learning curve. b. the first mover will be able to reduce the switching costs. c. the first mover will not have to patent its products or technology. d. the first mover will be able to reduce costs through economies of scale.
Answers: 3
Business, 22.06.2019 21:30, mydoggy152
Which of the following best explains the purpose of protectionist trade policies such as tariffs and subsidies? a. they make sure that governments have enough money to pay for fiscal policies. b. they give foreign competitors access to new markets around the world. c. they allow producers to sell their products more cheaply than foreign competitors. d. they enable producers to purchase productive resources from everywhere in the world.
Answers: 1
F. pierce products inc. is considering changing its capital structure. f. pierce currently has no de...
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