Please Show Steps If the economy booms, R F, Inc stock is expected to return 16 If the economy goes into a recessionary period, then R F is expected to only return 3 The probability of a boom is 80 while the probability of a recession is 20 What is the variance of the returns on R F stock A firm issues 100,000 equity shares with a total market value of $5,000,000 The firm's market value of debt is also of equal amount, i e , $5,000,000 The firm is expected to generate $1 5 million in operating income and pay $250,000 in interest Ignoring taxes, this will generate $12 50 earnings per share What will happen to EPS if the firm's borrowing and interest expense increases by 30 and the number of shares in circulation is cut by 50 (assuming that the share price remains unchanged with this change in capital structure) Sam's Souvenir Shop has a cost of debt of 8 percent, a cost of equity of 12 percent, and a cost of preferred stock of 9 percent The firm has 116,000 shares of common stock outstanding at a market price of $24 a share There are 51,000 shares of preferred stock outstanding at a market price of $38 a share The bond issue has a face value of $900,000 and a price quote of 105 percent The company's tax rate is 35 percent What is the weighted average cost of capital for Sam's Souvenir Shop McLain, Inc currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers The company owns land beside its current manufacturing facility that could be used for the expansion The company bought this land eight years ago at a cost of $500,000 At the time of purchase, the company paid $70,000 to level out the land so it would be suitable for future use Today, the land is valued at $750,000 The company currently has some unused equipment which it currently owns valued at $40,000 This equipment could be used for producing awnings if $10,000 is spent for equipment modifications Other equipment costing $400,000 will also be required What is the amount of the initial cash flow for this expansion project What return should be expected from investing in the market portfolio which is expected to yield 18 if the investment includes all of the investor's funds plus 200 of additional funds borrowed at the risk free rate of 6 An unlevered firm has an EBIT $250,000 forever, after tax net income $165,000, and a cost of capital of 12 A levered firm with the same assets and operations has $1 25 million in face value debt paying an 8 annual coupon the debt sells for par value in the marketplace What is the value of the levered firm The tax rate is 34 Stock A has a current price of $45 00, a Beta of 1 25, and a dividend yield of 6 25 If the Treasury bill yield is 5 and the market portfolio is expected to return 14 , what should Stock A sell for at the end of an investor's two year investment horizon

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Please Show Steps. If the economy booms, R&F, Inc. stock is expected to return 16%. If the economy goes into a recessionary period, then R&F

Please Show Steps.

If the economy booms, R&F, Inc. stock is expected to return 16%. If the economy goes into a recessionary period, then R&F is expected to only return 3%. The probability of a boom is 80% while the probability of a recession is 20%. What is the variance of the returns on R&F stock?
A firm issues 100,000 equity shares with a total market value of $5,000,000. The firm's market value of debt is also of equal amount, i.e., $5,000,000. The firm is expected to generate $1.5 million in operating income and pay $250,000 in interest. Ignoring taxes, this will generate $12.50 earnings per share. What will happen to EPS if the firm's borrowing and interest expense increases by 30% and the number of shares in circulation is cut by 50% (assuming that the share price remains unchanged with this change in capital structure)?
Sam's Souvenir Shop has a cost of debt of 8 percent, a cost of equity of 12 percent, and a cost of preferred stock of 9 percent. The firm has 116,000 shares of common stock outstanding at a market price of $24 a share. There are 51,000 shares of preferred stock outstanding at a market price of $38 a share. The bond issue has a face value of $900,000 and a price quote of 105 percent. The company's tax rate is 35 percent. What is the weighted average cost of capital for Sam's Souvenir Shop?
McLain, Inc. currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land eight years ago at a cost of $500,000. At the time of purchase, the company paid $70,000 to level out the land so it would be suitable for future use. Today, the land is valued at $750,000. The company currently has some unused equipment which it currently owns valued at $40,000. This equipment could be used for producing awnings if $10,000 is spent for equipment modifications. Other equipment costing $400,000 will also be required. What is the amount of the initial cash flow for this expansion project?
What return should be expected from investing in the market portfolio which is expected to yield 18% if the investment includes all of the investor's funds plus 200% of additional funds borrowed at the risk-free rate of 6%?
An unlevered firm has an EBIT = $250,000 forever, after-tax net income = $165,000, and a cost of capital of 12%. A levered firm with the same assets and operations has $1.25 million in face value debt paying an 8% annual coupon; the debt sells for par value in the marketplace. What is the value of the levered firm? The tax rate is 34%.
Stock A has a current price of $45.00, a Beta of 1.25, and a dividend yield of 6.25 %. If the Treasury bill yield is 5% and the market portfolio is expected to return 14%, what should Stock A sell for at the end of an investor's two-year investment horizon?