Fundamentals of Corporate Finance (4th Edition)

Chapter 13

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The cost pertains to the return that investors and... more

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Investors and creditors use market values because ... more

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The yield to maturity, net of the effective tax ... more

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While the CAPM model is backward looking, it ... more

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Due to the difference in risks encountered by ... more

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Determining a market risk premium requires ... more

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The main assumptions of the WACC include:Using the... more

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The inputs are:The calculated value of WACCThe ... more

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The assumption of average risk will tend to be ... more

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WACC should be calculated using the information ... more

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Additional costs include:Investment banking ... more

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The best way to account for other costs incurred ... more

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Long-term Debt: 24%Preferred Equity: 5%Common ... more

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Long-term Debt: 31%Common Equity: 69% ; Identify ... more

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Return on Assets = 8%WACC = 8% ; Identify the two ... more

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Company A has a higher equity cost of capital by 7... more

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7.34% ; Identify the inputs for the number of ... more

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4.55% ; Identify the cost of debt and tax rate. ; ... more

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8% ; Identify the current dividend and market ... more

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7.4% ; Identify the risk-free rate, beta, and the ... more

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23.5% ; Identify the risk-free rate, beta, and the... more

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9% ; Identify the dividends next year, the market ... more

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11% ; Identify the dividends next year, the market... more

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11.7% ; Identify the cost of debt and its weight ... more

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7.24% ; Identify the pre-tax cost of debt, tax ... more

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9.43% ; Identify the long-term debt, preferred ... more

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$214,285,714 ; Identify the free cash flow, WACC, ... more

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The project should be rejected because it ... more

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15% should be used to evaluate the investment. ; ... more

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$36,363,636 ; Identify the free cash flows, WACC, ... more

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8.25% ; Identify the risk-free rate, beta and the ... more

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4.40% ; Identify the pre-tax cost of debt, tax ... more

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The additional $7 million should be added to the ... more

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$14,400,000 ; Identify the funding requirement, ... more

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1.92% ; The yield to maturity rate for a 10-year ... more

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The market capitalization is $267.12 billion, ... more

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The pretax cost of debt is 2.656%. ; The yield of ... more

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Company W's bond issue information is taken into ... more

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$40,181,060,403.10 ; The market value of the bond ... more

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; Calculate the total market value of the firm. ... more

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6.8880% ; Identify variables to calculate the cost... more

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1.7264% ; Identify variables to calculate the cost... more

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6.2129% ; Identify variables to calculate the ... more

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6.2939% ; Calculate the net debt value. Net debt ... more

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There is an average confidence level in the ... more

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$40,000,000 ; Identify variables to calculate the ... more

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; Calculate the enterprise value by adding the ... more

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9.00% ; Identify variables to calculate the cost ... more

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3.25% ; Identify variables to calculate the cost ... more

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7.33% ; Identify variables to calculate the ... more

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If a new project bears the same risks as the ... more

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