Please answer the M.C questions that require calculations. Include steps to the solved answers.
Question 1 Answer saved Marked out of 1.11! ? Flag question Question 2 Not yet answered Marked out Df1.00 I? Flag question Question 3 Not yet answered Marked out of 1.11! ? Flag question Romeo Inc. has a debtequity ratio of 1.5, a share price of $5, and 500,000 shares outstanding. What is Romeo's market rm value? Select one: Q a. $2,500,000 :3 '0. $3,750,000 :3- 1:. $5,250,000 0 d. $6,250,000 :3 e. 3?.500000 Sierra Corporation hasjust paid a dividend of $2 per share, and its dividends are expected to grow at a steady rate of7% for the foreseeable future. The rm's shares are currently selling for $30 per share, with an equity beta of 1.2. The risk-free rate is 596 and expected market return is 13%. What is the rm's estimated cost of equity if we were to calculate it as the average of the costs ofequity from the dividend growth model and the security market line? Select one: C,- a. 14.13% :3 b. 14.20% :3 c. 14.37% :3 d. 14.00% :3 e. 14.89% Tango Enterprises has issued 100,000 coupon bonds, with maturity of 10 years. Each bond sells for $1,060. The bonds pay semi-annual coupons of 8% on face value of $1,000. What is Tango's cost of debt? Select one: Q a. 3.29% (3 b. 3.57% :3 c. 5.57% :3 d. 7.1 5% :3 e. 7.23% question 4 Nutyet answered Marked out of 1,11) ? Flag quason Quentin\" 5 Nutyet answered Marked out of 1.00 l? Flag queson An issue of preferred shares has a par value (595 per share, with a dividend on par of 8%. If the preferred shares are currently selling for $150 per share, what is the percentage cost of preferred shares? Select one: a\".- a. 5.07% O b. 5.33% f) c. 3.00% 0 d. 12.53% .7. e. 15.79% Unbelievable Deals Inc. has the following capita! structure and marginal tax rate (#3896. What is its WACC? Debt: 100,000 coupon bonds 10-year maturityI Face value of $1.000 Semi-annual coupon rate of 8% Bond price of$1,060 .0... Common shares: Riskifree rate = 5% Expected market risk premium = 0% Beta = 1.2 Number of common shares = 3,000,000 Common share price = $30 .0... Preferred shares: 0 Par value = $95 - Dividends = $12 I Share price = $150 I Number of preferred shares = 100,000 Select one: -.'_'- a. 7.14% {W b. 3.00% a\") c. 9.02% o d. 10.39% C- e. 11.55% Quinlan E Van Bran Inc. is looking into financing a $32 million project with an equity issue. Ifthe nn's underwriter charges a spread of 5% on equity issues, what is the gross Notyat answered amount that must be raised in II'an Bran's equity issue? Marked out of 1m Select one: Q a. $32,000,000 O b. $32,568,620 O 1:. $33,264,980 Q (1. $33,600,000 O e. $33,684,210 I? Flag question Question 7 Not yet answered Matted out of 1.11! ? Flag question Quelnn 8 Not yet answered Matted out of 1.00 " Flag question QIIIIHDII 9 Not yet answered Matted out of 1.00 I? Flag question The required return on a project should depend on Select one: Q a. the riskiness of the project's cash flows. O b. the rm's WACC. O c. the rm's systematic risk. Q d. the rm's operating leverage. 0 e. the debtequity mix in the project's funding Walter Inc. had net income of$350,000, debt-equity ratio of0_5, book value ofassels of $5 million, and 100,000 common shares outstanding. The companyjust paid a dividend per share of $2. What is Walter's estimated growth rate? Select one: Q a. 4.596 O b. 5.0% O c. 6.0% Q d. 7.5% :t e. 105% Ann is anticipated to generate an EBIT (if-$2 million, with depreciation of $200,000, change in NWC of $120,000, and capital spending of $350,000 per year. The firm's marginal tax rate is 35%. What is the rm's annual adjusted cash flow from assets without debt nancing? Select one: Q a. $430000 O 13. $630,000 0 c. $1 $130,000 Q d. $1,730,000 0 e. $1,910,000 Quentin 1O Notyal anmred Marked out of 1m 53'9\" ma: 1' Flag quamn O a. the net present value approach. XTra Ltd. Has a rmwide WACC of 10%. However, it uses a project's unique risk and WACC in its capital budgeting decisions. This decision making approach is called O b. the pure play approach. O c. the subjective approach. Q d. the systematic risk approach. O a. the discounted cash flow approach
