Business, 18.12.2019 21:31, trentonthreats5073

Midwest electric company (mec) is considering the purchase of another utility supplier in order to install smart technology in customer homes. this technology allows midwest to read the electric meters more accurately. mec can borrow unlimited amounts at an interest rate of rd = 7% as long as it finances at its target capital structure, which calls for 55% debt and 45% common equity. its last dividend was $2, its expected constant growth rate is 4%, and its common stock sells for $20. mec’s tax rate is 40%. two projects are available: project a has a rate of return of 13%, while project b’s return is 10%. these two projects are equally risky and about as risky as the firm’s existing assets. a. what is mec’s cost of debt before taxes?

Answers: 1

Show answers

Other questions on the subject: Business

Business, 22.06.2019 13:20, sailesd57

Last year, johnson mills had annual revenue of $37,800, cost of goods sold of $23,200, and administrative expenses of $6,300. the firm paid $700 in dividends and had a tax rate of 35 percent. the firm added $2,810 to retained earnings. the firm had no long-term debt. what was the depreciation expense?

Answers: 2

continue

Business, 22.06.2019 14:20, kevinglvz

Anew 2-lane road is needed in a part of town that is growing. at some point the road will need 4 lanes to handle the anticipated traffic. if the city's optimistic estimate of growth is used, the expansion will be needed in 4 years and has a probability of happening of 40%. for the most likely and pessimistic estimates, the expansion will be needed in 8 and 15 years respectively. the probability of the pessimistic estimate happening is 20%. the expansion will cost $ 4.2 million and the interest rate is 8%. what is the expected pw the expansion will cost?

Answers: 1

continue

Business, 22.06.2019 14:30, dabicvietboi

Which of the following is an example of a positive externality? a. promoting generic drugs would benefit people. b. a lower inflation rate would benefit most consumers. c. compulsory flu shots for all students prevents the spread of illness in the general public. d. singapore has adopted a comprehensive savings plan for all workers known as the central provident fund.

Answers: 1

continue

Business, 22.06.2019 17:50, pickles3233

The management of a supermarket wants to adopt a new promotional policy of giving a free gift to every customer who spends > a certain amount per visit at this supermarket. the expectation of the management is that after this promotional policy is advertised, the expenditures for all customers at this supermarket will be normally distributed with a mean of $95 and a standard deviation of $20. if the management wants to give free gifts to at most 10% of the customers, what should the amount be above which a customer would receive a free gift?

Answers: 1

continue

Do you know the correct answer?

Midwest electric company (mec) is considering the purchase of another utility supplier in order to i...