Questions from Corporate Finance

Q: Nemesis, Inc., has 165,000 shares of stock outstanding. Each share

Nemesis, Inc., has 165,000 shares of stock outstanding. Each share is worth $77, so the company’s market value of equity is $12,705,000. Suppose the firm issues 30,000 new shares at the following pric...

Q: Wayne, Inc., wishes to expand its facilities. The company currently

Wayne, Inc., wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $64 per share, but the book value per share is $19. Net income is...

Q: You need a 30-year, fixed-rate mortgage to buy a new

You need a 30-year, fixed-rate mortgage to buy a new home for $235,000. Your mortgage bank will lend you the money at an APR of 5.35 percent for this 360-month loan. However, you can afford monthly pa...

Q: Ghost, Inc., has no debt outstanding and a total market

Ghost, Inc., has no debt outstanding and a total market value of $185,000. Earnings before interest and taxes, EBIT, are projected to be $29,000 if economic conditions are normal. If there is strong e...

Q: Thrice Corp. uses no debt. The weighted average cost of

Thrice Corp. uses no debt. The weighted average cost of capital is 8.4 percent. If the current market value of the equity is $16.3 million and there are no taxes, what is EBIT?

Q: In Problem 10, suppose the corporate tax rate is 22

In Problem 10, suppose the corporate tax rate is 22 percent. What is EBIT in this case? What is the WACC? Explain.Problem 10:Thrice Corp. uses no debt. The weighted average cost of capital is 8.4 perc...

Q: Blitz Industries has a debt-equity ratio of 1.25. Its WACC

Blitz Industries has a debt-equity ratio of 1.25. Its WACC is 8.3 percent, and its cost of debt is 5.1 percent. The corporate tax rate is 21 percent.a. What is the company’s cost of equity capital?b....