Webster Global Services has debt at an after-tax rate of 4.8% and equity with a required return of 6.7%, given a Debt/Equity ratio of 1.6, calculate the Weighted Average Cost of Capital.
There is no preferred stock. Webster Global Parnters (WGP) is evaluating an investment in Pulang, SA., a distributor of home appliances. As with any venture capitalist, they seek to sell out after 5 years. WGP estimates a required rate of return of 6.1%. After five years the growth rate is project to be 3.7% per year. Free cash flow in year 5 is expected to be $171 million. Pulang is expected to be sold at its terminal value. Calculate the terminal value.
Swamp and Sand Industries has outstanding debt of 59 and equity of 22. Calculate the equity as a percentage of total assets.
Milky Way Equity Partners expects to sell its investment in Jupiter Motors for $125 million in 8 years at a discount rate of 7%. At this discount rate, calculate the present value of this cash flow.
St. Louis Brewing Co. has an unlevered beta of 2.8 , however, they want to add debt until their debt-to-equity ratio is 4.7 . Currently, they have a tax rate of 20%. Calculate the new levered beta.
Grokster Investment analysts have determined the market rate of return to be 8.7%. In evaluating investments over a 20 year time horizon, they use the 20 year T-Bond rate as the risk-free rate which is currently 1.2%. In order to evaluate investments, calculate the Market Risk Premium (MRP).