Question
1) A project has the following information. Price is $62 per unit, variable cost is $41 per unit, fixed costs is $15500, required return is
1) A project has the following information. Price is $62 per unit, variable cost is $41 per unit, fixed costs is $15500, required return is 12%, initial investment $24000, project life is 4 years. Ignoring taxes,
- Whats accounting breakeven
- Whats cash breakeven
- Whats financial breakeven?
- Whats DOL at financial breakeven level?
2) A stock has a beta of 1.05. The expected return of the market is 10%, and risk free rate is 3.8%.
Whats the expected return of the stock?
3) Holdup bank has an issue of preferred stock with a 4.25 stated dividend and its selling for $92 per share. Whats the cost of its preferred?
4) Molineux corp. has market value of equity at $20 billion, and its debt book value is $4 billion. Its cost of equity is 12%, and pretax cost of debt of 7%. Its tax rate is 35%.
- Whats the companys capital structure?
- Whats the after tax cost of debt?
- Whats the companys WACC?
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