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Consider the following balance sheet of a publicly held company : Cash $760,000 Long Term Dobt $7633,500 Receivables $1,250,000 Common Stocks $14,176,500 Inventories $2,225,000 Net
Consider the following balance sheet of a publicly held company :
Cash $760,000
Long Term Dobt $7633,500
Receivables $1,250,000
Common Stocks $14,176,500
Inventories $2,225,000
Net Equipment $17,575,000
it is estimated that the yield to maturity on bonds are 9% The company faces a margina tax rate of 34% Assume that stock price of this company rises such that it would sell at 1 35 times its book value (amount in the balance sheet) causing its cost of equity to move to 115% What would be the weighted average cost of capital for this firm?
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Option D is correct 991 Explanation We Are given that Value of Common Stock 1417...
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Financial Accounting in an Economic Context
Authors: Jamie Pratt
10th edition
978-1-119-3061, 1119306167, 978-1119444367
