Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need help on this corporate finance question please 2. Funny Bear Company has 40% debt and 60% equity, as optimal capital structure. Their stock

i need help on this corporate finance question please
image text in transcribed
2. Funny Bear Company has 40% debt and 60% equity, as optimal capital structure. Their stock price is $60, last dividend distributed was $6.5, growth rate is expected as 7%, corporate tax rate is 20% and flotation costs are 10%. They can borrow at 10% rate up to $15 million, above which interest rate rises to 12%. Their expected net income for next year is $27 million, and 45% will be distributed as dividends. They have three projects under analysis: A has 17 million cost. 18% IRR, B has 30-million cost and 16% IRR and C has 15 million cost and 14% IRR. a. Please calculate component costs, and break point(s). b. Please calculate WACC's! C. What will be the optimal capital budget? doar of $15 and fived

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Literacy For Managers

Authors: Richard A. Lambert

1st Edition

1613630182, 978-1613630181

More Books

Students also viewed these Finance questions

Question

=+d) Which car would you produce and why?

Answered: 1 week ago

Question

Learn about HRM challenges in the textile industry.

Answered: 1 week ago