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What is the weighted-average cost of capital for SKYE Corporation given the following information? A security analyst has regressed the monthly returns on Exxon Mobil
What is the weighted-average cost of capital for SKYE Corporation given the following information? A security analyst has regressed the monthly returns on Exxon Mobil equity shares over the past five years against those on the Standard \& Poor's 500 stock index over the same period. The resulting regression equation is rEM=0.07+1.55rSP. Use this equation to estimate Exxon Mobil's equity beta. Note: Round your answer to 2 decimal places. An all-equity financed company has a cost of capital of 10 percent. It owns one asset: a mine capable of generating $99 million in free cash flow every year for five years, at which time it will be abandoned. A buyout firm proposes to purchase the company for $340 million financed with $290 million in compound interest debt to be repaid in five, equal, end-of-year payments and carrying an interest rate of 11.0 percent. a. Calculate the annual debt-service payments required on the debt. b. Ignoring taxes, estimate the rate of return to the buyout firm on the acquisition after debt service. Note: Round your answers to 1 decimal place. You are valuing a project for Gila Corporation using the APV method. You already found the net present value of free cash flows from the project (discounted at the appropriate cost of equity) to be $540,000. The only important side effect of financing is the present value of interest tax shields. The project will be partially financed by a constant $1 million in debt over the life of the project, which is three years. Gila's tax rate is 45 percent, and the current interest rate applicable for the project's debt is 7 percent (assume this rate is also appropriate for discounting the interest tax shields). Assuming tax shields are realized at the end of each year, what is the APV of the project? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar
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