Business, 05.05.2020 05:21 sweetcandy16gaming
Hero Manufacturing has 7.5 million shares of common stock outstanding. The current share price is $87 and the book value per share is $4. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6.3 percent and sells for 106.5 percent of par. The second issue has a face value of $50.5 million, a coupon rate of 6.8 percent and sells for 110.3 percent of par. The first issue matures in 8 years, the second in 24 years.
a. What are Filer’s capital structure weights on book value basis?
b. What are Filer’s capital structure weights on a market value basis?
c. Which are more relevant, the book or market value weights? Why?
d. Suppose the most recent dividend was $4 and the dividend growth rate is 6 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 35 percent. What is the company’s WACC?
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Gerda, a real estate agent, is selling a moderately priced house in a subdivision. she knows from her uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a process that creates a very strong odor that permeates the surrounding neighborhood. a buyer, who is unaware of the type of factory under construction, makes an offer on one of the houses gerda is selling, and within a short time, the deal goes through. what does this scenario best illustrate?
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Sales at a fast-food restaurant average $6,000 per day. the restaurant decided to introduce an advertising campaign to increase daily sales. to determine the effectiveness of the advertising campaign, a sample of 49 days of sales were taken. they found that the average daily sales were $6,300 per day. from past history, the restaurant knew that its population standard deviation is about $1,000. if the level of significance is 0.01, have sales increased as a result of the advertising campaign? multiple choicea)fail to reject the null hypothesis.b)reject the null hypothesis and conclude the mean is higher than $6,000 per day.c)reject the null hypothesis and conclude the mean is lower than $6,000 per day.d)reject the null hypothesis and conclude that the mean is equal to $6,000 per day.expert answer
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Hero Manufacturing has 7.5 million shares of common stock outstanding. The current share price is $8...
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