FIN – 516 – WEEK 2 HOMEWORK ANSWER KEY - REVISED PROBLEM BASED ON CHAPTER 15 – WACC & THE HAMADA FORMULA Bickley’s Unlevered Beta: bu = b / (1+(1-T) ( D/S) = 1.3/( 1+(1-.40)(30/70) = 1.3 / (1+(.60) (.4286)) = 1.03 Bickley’s New Levered Beta: bL = bu X (1+(1-.40) ( 15/85) = 1.03 X (1 + (.60)(0.1765) = 1.14 Bickley’s WACC with the 30/70 Capital Structure: Cost of Equity: ke = 3.5% +(1.3 X 7.5) = 13.25% WACC = [7.5% X (1 - .40) X 30%] + [13.25% X 70%] = 1.35% + 9.28% = 10
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1. | Question : | (TCO D) Which of the following statements concerning common stock and the investment banking process is NOT CORRECT? (a) The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue. (b) If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market. (c) Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity
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In order to assure that you are prepared for the Final Exam, I have been reviewing almost 50 questions for clear wording, sufficient information and correct answers. Most importantly, I wanted to make sure we have covered in class the relevant financial concepts and applications to enable you to respond appropriately. Although I did not generate the Final Exam, I took the liberty of making a few changes in the questions when absolutely necessary. If you stayed to the end of our last class, you have
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Claudia Gaeta FIN 516- Week 4 homework Chapter 20 – Problem 20 – 1 Profit or Loss on New Stock Issue Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows: Price to public | $5 per share | Number of shares | 3 million | Proceeds to Beedles | $14,000,000 | The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $300,000. What profit or loss would
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Chapter 20 – Problem 20 – 1 Profit or Loss on New Stock Issue Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows: Price to public $5 per share Number of shares 3 million Proceeds to Beedles $14,000,000 The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $300,000. What profit or loss would Security Brokers incur if the issue were sold to the public
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MINI – CASE ASSIGNMENT Facebook 1. What is the name of the company? What is the industry sector? Facebook Inc. is a multi-billion dollar company in the Internet informational providers, technology (IT) industry. Facebook Inc. is one of the leading an online social networking service in the world and is continuing to grow as the front-runner in their industry. 2. What are the operating risks of the company? No company with no operational risks to consider. Operational risk is the
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| FIN-516 Week 2 - MINI – CASE ASSIGNMENT | Deere & Company (NYSE:DE) | | A fundamental Analysis into the financial performance of Deer and Company (NYSE :DE ), better known as JOHN DEERE & CO. | FIN-516 – WEEK 2 – MINI – CASE ASSIGNMENT Deere & Company (NYSE:DE) 1. What is the name of the company? What is the industry sector? Deere & Company also more commonly known as John Deere, along with its subsidiaries, operates in three segments: agriculture and
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Japan's whaling fleet was headed home from the southern ocean after ending its annual Antarctic hunt with only a third of its expected catch, news reports from Japan said Friday. The hunt ended three days ago with a catch of 266 minke whales and one fin whale, officials from Japan's Fisheries Agency said, according to one report from Australia's ABC news online. The Sea Shephed Society, which sent a fleet of vessels to the southern ocean to block the hunt, proclaimed victory on its website. "Operation
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There has been a debate for a long time now about killer whales being kept in captivity. Some of the differences between the two environments are the whales behavior, how they eat, and their dorsal fins. Killer whales are amazing creatures that can live up to 29 years. What exactly determines how long they live? The main factor is usually if they are kept in captivity or in the wild. In the wild, killer whales’ swim up to 100 miles a day. They socialize with other members of their pod and usually
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undergo when caught and killed (The Whale Debate: Whale Wars, 2014). Another hot topic in the debate right now is the right to kill a certain amount of whales for scientific research, Japan kills 1000 minke whales a year and about 100 endangered fin and humpback whales. Whales are mammals the same as we are and they are intelligent and have feelings such as pain and a sense of loss. Before I get into my opinion I will list the pros and cons of this particular activity. There are a few of each
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