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Help! I believe you answered parts of this question for "discreetmale36" in August...but I...
More:Help! I believe you answered parts of this question for "discreetmale36" in August...but I think some of the numbers are different...could you please assist? And can you put in excel format? the assignment is attached Document Preview: Assignment: You are interested in proposing a new venture to the management of your company. Pertinent financial information is given below. BALANCE SHEET Cash 2,000,000 Accounts Payable and Accruals 18,000,000 Accounts Receivable 28,000,000 Notes Payable 40,000,000 Inventories 42,000,000 Long-Term Debt 60,000,000 Preferred Stock 10,000,000 Net Fixed Assets 133,000,000 Common Equity 77,000,000 Total Assets 205,000,000 Total Claims 205,000,000 Last year’s sales were $225,000,000. The company has 60,000 bonds with a 30-year life outstanding, with 15 years until maturity. The bonds carry a 10 percent semi-annual coupon, and are currently selling for $874.78. You also have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The current market price is $90.00. Any new issues of preferred stock would incur a $3.00 per share flotation cost. The company has 10 million shares of common stock outstanding with a currently price of $14.00 per share. The stock exhibits a constant growth rate of 10 percent. The last dividend (D0) was $.80. New stock could be sold with flotation costs, including market pressure, of 15 percent. The risk-free rate is currently 6 percent, and the rate of return on the stock market as a whole is 14 percent. Your stock’s beta is 1.22. Stockholders require a risk premium of 5 percent above the return on the firms bonds. The firm expects to have additional retained earnings of $10 million in the coming year, and expects depreciation expenses of $35 million. Your firm does not use notes payable for long-term financing. The firm considers its current market value capital structure to be optimal, and wishes to maintain that structure. (Hint: Examine the market value of the firm’s capital structure, rather than its book value.) The firm is currently using its assets at capacity. The firm’s management requires a 2 percent adjustment to the cost of capital for risky projects. Your firm’s federal +...
This question was answered on: Feb 21, 2020
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