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In: Finance
Here are book- and market-value balance sheet the United Frypan Company (figures in $ millions): Book-Value...
Here are book- and market-value balance sheet the United Frypan Company (figures in $ millions): Book-Value Balance Sheet Net working capital $ 40 Debt $ 30 Long-term assets 60 Equity 70 $ 100 $ 100 Market-Value Balance Sheet Net working capital $ 40 Debt $ 30 Long-term assets 195 Equity 205 $ 235 $ 235 Assume that MM’s theory holds except for taxes. There is no growth, and the $30 of debt is expected to be permanent. Assume a 21% corporate tax rate. b. What is United Frypan’s after-tax WACC if rDebt = 7.0% and rEquity = 16.0%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, other things equal? Assume a borrowing rate of 7.0%. (Do not round intermediate calculations. Enter your answer in million rounded to 2 decimal places.)
Solutions
jeff jeffy answered 7 months agoRelated Solutions
Here are book- and market-value balance sheets of the United Frypan Company (figures in $ millions):...
Here are book- and market-value balance sheets of the United
Frypan Company (figures in $ millions):
Book-Value Balance Sheet
Net working
capital
$
35
Debt
$
40
Long-term
assets
65
Equity
60
$
100
$
100
Market-Value Balance Sheet
Net working
capital
$
35
Debt
$
40
Long-term
assets
190
Equity
185
$
225
$
225
Assume that MM’s theory holds except for taxes. There is no
growth, and the $40 of debt is expected to be permanent. Assume a...
Here are book- and market-value balance sheets of the United Frypan Company (figures in $ millions):...
Here are book- and market-value balance sheets of the United
Frypan Company (figures in $ millions): Book-Value Balance Sheet
Net working capital $ 45 Debt $ 45 Long-term assets 55 Equity 55 $
100 $ 100 Market-Value Balance Sheet Net working capital $ 45 Debt
$ 45 Long-term assets 200 Equity 200 $ 245 $ 245 Assume that MM’s
theory holds except for taxes. There is no growth, and the $45 of
debt is expected to be permanent. Assume a...
Here are book- and market-value balance sheets of the United Frypan Company: Book-Value Balance Sheet Net...
Here are book- and market-value balance sheets of the United
Frypan Company:
Book-Value Balance Sheet
Net working capital
$
35
Debt
$
40
Long-term assets
65
Equity
60
$
100
$
100
Market-Value Balance Sheet
Net working capital
$
35
Debt
$
40
Long-term assets
190
Equity
185
$
225
$
225
Assume that MM’s theory holds except for taxes. There is no
growth, and the $40 of debt is expected to be permanent. Assume a
37% corporate tax rate....
Here are book and market-value balance sheets of the United Frypan Company: Book-Value Balance Sheet Net...
Here are book and market-value balance sheets of the United
Frypan Company:
Book-Value Balance Sheet
Net working capital
$
70
Debt
$
60
Long-term assets
30
Equity
40
$
100
$
100
Market-Value Balance Sheet
Net working capital
$
70
Debt
$
60
Long-term assets
150
Equity
160
$
220
$
220
Assume that MM’s theory holds except for taxes. There is no
growth, and the $60 of debt is expected to be permanent. Assume a
36% corporate tax rate....
Here are book- and market-value balance sheets of the United Frypan Company: Book-Value Balance Sheet Net...
Here are book- and market-value balance sheets of the United
Frypan Company:
Book-Value Balance Sheet
Net working capital
$
30
Debt
$
80
Long-term assets
70
Equity
20
$
100
$
100
Market-Value Balance Sheet
Net working capital
$
30
Debt
$
80
Long-term assets
170
Equity
120
$
200
$
200
Assume that MM’s theory holds except for taxes. There is no
growth, and the $80 of debt is expected to be permanent. Assume a
32% corporate tax rate....
Here are book and market value balance sheets of the United Frypan Company. Book value balance...
Here are book and market value balance sheets of the United
Frypan Company.
Book value balance sheet
Net working capital 25 Debt 60
Long term assets 75 Equity 40
100 100
Market value balance sheet
Net working capital 25 debt
60
Long term assets 180 equity 145
205 205
Assume that MM's theory holds except for taxes. There is no
growth, and the $60 of debt is expected to...
what is the difference between a book-value balance sheet and a market value balance sheet? Which...
what is the difference between a book-value balance sheet and a
market value balance sheet? Which provides better information to
investors and management.
The market value balance sheet for Bobaflex Manufacturing is shown here. The company has declared a...
The market value balance sheet for Bobaflex Manufacturing is
shown here. The company has declared a 25 percent stock dividend.
The stock goes ex dividend tomorrow (the chronology for a stock
dividend is similar to that for a cash dividend).
Market Value Balance Sheet
Cash
$
99,000
Debt
$
158,000
Fixed assets
830,000
Equity
771,000
Total
$
929,000
Total
$
929,000
a.
There are 34,000 shares of stock outstanding. What is the
current share price? (Do not round...
Here is a simplified balance sheet for Locust Farming: Locust Farming Balance Sheet ($ in millions)...
Here is a simplified balance sheet for Locust Farming:
Locust Farming
Balance Sheet
($ in millions)
Current assets
$
42,524
Current liabilities
$
29,755
Long-term assets
46,832
Long-term debt
27,752
Other liabilities
14,317
Equity
17,532
Total
$
89,356
Total
$
89,356
Locust has 657 million shares outstanding with a market price of
$83 a share.
a. Calculate the company’s market value added.
(Enter your answers in millions.)
b. Calculate the market-to-book ratio.
(Round your answer to 2 decimal places.)
c....
The Balance sheet for a company shows a book value ofstockholders equity (book value per...
The Balance sheet for a company shows a book value of stockholders equity (book value per share x total shares outstanding) of $23,500,000. Furthermore, the firm's income statement for the year just ended has net income of $500,000, which is $0.25 per share of common stock outstanding. the P/E ratio for firm similar to this company is 20.Q1. What price would you expect this company share to sell forQ2. what is the book value per share for this company
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