Business, 01.04.2021 22:00, anher

You have been asked to review the cost of capital computation for Lemur Inc., a small retail company. The company currently has 100 million shares trading at $10 a share, no conventional debt. However, the firm has two lease commitments: (1) a lease commitment of $25 million a year for the next 10 years and (2) another lease commitment of $20 million a year for the following 6 years. If the cost of equity of the firm is 10%, the pre-tax cost of debt for the firm is 6% and the marginal tax rate is 40%, estimate the cost of capital. What is the reason for trying to estimate the capitalised value of the lease commitment when estimating the leverage ratio

Answers: 3

Show answers

Other questions on the subject: Business

Business, 22.06.2019 11:00, ayoismeisjjjjuan

Acoase solution to a problem of externality ensures that a socially efficient outcome is to

Answers: 2

continue

Business, 22.06.2019 20:30, maguilarz2005

Contrast two economies that transitioned to capitalism and explain what factors affected the ease kf their transition as welas the “face” of capitalism that each has adopted

Answers: 2

continue

Business, 22.06.2019 20:50, JasJackson

Barbara flynn is in charge of maintaining hospital supplies at general hospital. during the past year, the mean lead time demand for bandage bx-5 was 65 (and was normally distributed). furthermore, the standard deviation for bx-5 was 6. ms. flynn would like to maintain a 90% service level. refer to the standard normal table for z-values. a) what safety stock level do you recommend for bx-5? safety stock=)what is the appropriate reorder point? reorder point=

Answers: 1

continue

Business, 22.06.2019 21:40, supasavb99

Western electric has 32,000 shares of common stock outstanding at a price per share of $79 and a rate of return of 13.00 percent. the firm has 7,300 shares of 7.80 percent preferred stock outstanding at a price of $95.00 per share. the preferred stock has a par value of $100. the outstanding debt has a total face value of $404,000 and currently sells for 111 percent of face. the yield to maturity on the debt is 8.08 percent. what is the firm's weighted average cost of capital if the tax rate is 39 percent?

Answers: 2

continue

Do you know the correct answer?

You have been asked to review the cost of capital computation for Lemur Inc., a small retail company...