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Senecal Enterprises is estimating its cost of capital for the first time and has made the following estimates. The firm's debt carries a AAA rating and is currently yielding 8.2%. The firm pays taxes at a rate of 40%. The cost of equity is estimated to be 14%. The firm's debt is equal to 62% of its enterprise value. What is Senecal's WACC? Please answer in decimal form to 4 decimal places. Gator Enterprises is doing its annual review of its cost of capital. The firm relies on the CAPM to estimate its cost of equity. The firm estimates its equity beta is 0.8, and today’s yield on long-term U.S. Treasury bonds is 5.7%. The firm’s CFO estimates the equity risk premium (same as market risk premium) to be 4.9%. Estimate the firm’s cost of equity capital. Answer in decimal form to four decimal places. The Bernier Corporation has a straight bond issue outstanding that is due in 16 years. The bonds pay interest semiannually and sell for 102% per bond. (The price is expressed as a percent of par. Par is $1,000.) The coupon (on an annual basis) is 8.25%. What is the NOMINAL yield to maturity to the bondholders (also called the bond equivalent yield)? Answer as a percentage to 4 decimal places. Do not include the percentage sign. The Polaroid Corporation has a straight bond issue outstanding that is due in 8 years. The bonds pay interest semiannually and sell for 89% per bond. (The price is expressed as a percent of par. Par is $1,000.) The coupon (on an annual basis) is 8.8%. What is the effective yield to maturity to the bondholders (the yield expressed as an effective annual rate)? Answer as a percent to 4 decimal places. Do not include the percentage sign. On February 2, 2017 General Motors had the following bond outstanding: Coupon 6.68%, Maturity 8/1/2040, Rating Baa2/BBB-, Price 128. Find the nominal yield to maturity at this time (same as bond equivalent yield). Do not count days; rather count 6 month periods. Answer in percent to 4 decimal places. Do not include the percentage sign. Rock Company has 3 million shares of common equity outstanding with a book value of $1 per share, retained earnings of $40 million, and a market value of $65 per share. It has debt with a par value of $26 million that is trading at 102% of par (this is the only debt issue it has). What is the weight of equity to use in a WACC calculation? Answer in decimal form to 3 decimal places. Cusack Company's stock has a price of $59 and the firm expects to issue a dividend of 0.87 next year (at t = 1). It has a beta of 1.1, the risk-free rate is 3.92%, and the market risk premium is estimated to be 5.7%. Using all this information, tell me the rate Cusack's dividends need to grow for the CAPM and the dividend growth model to give the same required retun to equity. Answer in percent form (to two decimal places). Omit the percent sign. Adobe has debt with a yield of 5.2%, a cost of equity of 12.9%, and a cost of preferred stock of 8.3%. The market values of its debt, preferred stock, and equity are $74 million, $15 million, and $78 million, respectively. It's tax rate is 40%. What is this firm's WACC? Answer in percent to 2 decimal places. G ator Enterprises is doing its annual review of its cost of capital. The firm relies on the CAPM to estimate its cost of equity. The firm estimates its equity beta is 0.8, and today’s yield on long-term U.S. Treasury bonds is 5.7%. The firm’s CFO estimates the equity risk premium (same as market risk premium) to be 4.9%. Estimate the firm’s cost of equity capital. Answer in decimal form to four decimal places. You need to estimate the cost of equity (Ke) for a firm, Hokie Enterprises. The firm is a mature firm with a stable dividend policy. The dividend just paid (yesterday) was $1.1 per share, and you expect the dividend growth rate to be 7.5% per year for a long long time. The stock currently sells for $19.6 per share. What is your estimate of the firm’s cost of equity? Answer in decimal form to four decimal places.
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