Corporate Finance (12th Edition)

Chapter 13

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No, the cost of capital is derived from the risk ... more

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As the cost of debt takes into account the tax ... more

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The two primary assumptions are:All projects are ... more

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The advantage of using the SML approach to find ... more

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The appropriate cost of debt for a company can be ... more

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Company S can go ahead with the investment project... more

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For the different operating divisions with ... more

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The SML provides the cost of capital using the ... more

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The beta of a stock depends on the following ... more

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9.64% ; Identify the information required to ... more

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Pre-tax cost of debt: 6.49%.After-tax cost of debt... more

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Total book value of the debt = $85,000,000 Total ... more

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8.95% ; Calculate the WACC of the firm by adding ... more

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9.90% ; Determine the weight of equity by dividing... more

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0.47 ; Determine the debt-to-equity ratio of the ... more

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9.12% ; Compute the market value of equity by ... more

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6.27% ; Compute the total market value (MV) by ... more

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$79,660,116.83 ; Compute the weighted average ... more

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The project should be undertaken only when it's ... more

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7.67% ; Compute the market value of equity by ... more

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0.35 ; Compute the total capital raised by adding ... more

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$67.63 ; Compute the cash flows from Year 1 to ... more

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$24,272,742.25 ; Compute the cost of capital using... more

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When financed externally = $146,102,164.87. When ... more

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Book Value of Equity: $6,040,000,000.Book Value of... more

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Current stock price: $443.01Market value of equity... more

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Beta of Competitors: Company G: 1.39Company F: 1.... more

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Book Value YTM: 1.84%Market Value YTM: 1.87% It is... more

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Book value WACC:  3.91%Market value WACC: 9.01% ... more

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Some problems of using a public company's figures ... more

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