Business, 30.11.2019 05:31 josue718

Beckman engineering and associates (bea) is considering a change in its capital structure bea currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 millions shares outstanding. bea is a zero growth firm and pays out all of its earnings as dividends. ebit is $14,933 millions, and bea faces a 40% debt, federal plus-rate-tax rate. the market risk premium is 4%, and the risk-free rate is 6%. bea is considering increasing its debt level to a capital structure with 40% debt, based on market values, and repurchasing shares with the extra money that it borrows. bea will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 9%. bea has a beta of 1.0.

a- what is bea's unlevered beta? use market value d/s when unlevering.
b- what are bea's new beta and cost of equity if it has 40% debt?
c- what are bea's wacc and total value of the firm with 40% debt? .
report abuse

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 14:50

Pear co.’s income statement for the year ended december 31, as prepared by pear’s controller, reported income before taxes of $125,000. the auditor questioned the following amounts that had been included in income before taxes: equity in earnings of cinn co. $ 40,000 dividends received from cinn 8,000 adjustments to profits of prior years for arithmetical errors in depreciation (35,000) pear owns 40% of cinn’s common stock, and no acquisition differentials are relevant. pear’s december 31 income statement should report income before taxes of

Answers: 3

Answer

Business, 22.06.2019 15:30

Uknow what i love about i ask a dumb question it is immediately answered but when i ask a real question it take like an hour to get answered

Answers: 2

Answer

Business, 22.06.2019 19:40

The following cost and inventory data are taken from the accounting records of mason company for the year just completed: costs incurred: direct labor cost $ 90,000 purchases of raw materials $ 134,000 manufacturing overhead $ 205,000 advertising expense $ 45,000 sales salaries $ 101,000 depreciation, office equipment $ 225,000 beginning of the year end of the year inventories: raw materials $ 8,100 $ 10,300 work in process $ 5,900 $ 21,000 finished goods $ 77,000 $ 25,800 required: 1. prepare a schedule of cost of goods manufactured. 2. prepare the cost of goods sold section of mason company’s income statement for the year.

Answers: 3

Answer

Business, 22.06.2019 20:30

The former chairman of the federal reserve, alan greenspan, used the term "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. stock market indexes such as the s& p composite price index were at an all-time high. some commentators believed that the fed should intervene to slow the expansion of the economy. why would central banks want to clamp down when the economy is growing? a. to block the formation of unsustainable speculative asset bubbles. b. to curtail excessive profits in the banking system. c. to prevent inflationary forces from gathering momentum. d. all of the above. e. a and c only.

Answers: 3

Answer

You know the right answer?

Beckman engineering and associates (bea) is considering a change in its capital structure bea curren...

Questions