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The expected return on a firm's equity is 15%, and the firm has a yield to maturity on its debt of 4%. Debt accounts for
"The expected return on a firm's equity is 15%, and the firm has a yield to maturity on its debt of 4%. Debt accounts for 30%, common equity for 65% and preferred equity for 5% of the firm's total market value. If its tax rate is 20%, and the cost of preferred equity is 20%, what is this firm s WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05" QUESTION 8 "Firm UVW has a face debt value of $30 Million USDs trading at 90% with a pre-tax weighted cost of 7%. Firm UVW's common equity for the year was valued at $100 Million of USDs and preferred equity for $10 Million of USDs. The Preferred equity rate was calculated to be 15%. However, the common equity was to be calculated using CAPM approach, with a 2.5% risk free rate and a 15% market risk premium rate, assuming a Beta of 1. If the tax rate is 30%, what is Firm UVW s WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05" QUESTION 9 "You founded your firm with a contribution of $300,000, receiving 6,000,000 shares of stock. Since then, you sold 6,000,000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $3,000,000 and would receive 6,000,000 newly issued shares. What is the post-money valuation? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000
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