Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help please please please asap help please it important ABC Inc. currently has zero debt. Its free cash flow last year was $48,000, and
Please help please please please asap help please it important
ABC Inc. currently has zero debt. Its free cash flow last year was $48,000, and it is a zero growth company. ABC's current WACC is 10%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. The company is considering switching to a capital structure of 35% debt and 65% equity, which would result in a WACC of 8.9%. What would the new stock price be under the new capital structure? $57.42 $48.00 $53.93 $59.57 $55.82 Question 22 (1.33 points) Which of the following statements is CORRECT? Despite several advantages of share repurchases, dividends remain the dominant form of shareholder payout. After announcing a share repurchase program, a firm is not required to repurchase any of the shares it intended to buy back. All of the statements are correct. One advantage of dividends over share repurchases is that dividends provide financial managers with more flexibility. None of the statements are correct. You work for a constant-growth firm that is valued at $500 million. It has a capital structure of 25% debt and 75% equity, and there are no short-term investments. Your firm's current tax rate is 35%, but Congress is expected to pass legislation that will decrease it to 25%. If the firm's capital structure and costs of capital remain constant, what will happen to the firm's WACC? The WACC will decrease. The WACC could increase, decrease, or remain constant. The WACC will increase. I am still waiting to start bowling. The WACC will remain constant Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started