Question: please help fast ABC Inc. currently has zero debt. Its free cash flow last year was $75,000, and it is a zero growth company.ABC's current

please help fast

ABC Inc. currently has zero debt. Its free cash flow last year was $75,000, and it is a zero growth company.ABC's current WACC is 12.25%, and its tax rate is 35%. The firm has 20,000 shares of common stockoutstanding selling at a price per share of $30.61. The company is considering switching to a capitalstructure of 25% debt and 75% equity, which would result in a WACC of 11.10%. What would the newstock price be under the new capital structure?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Pace, CPA, is performing audit procedures for the December 31, Year 3 audit of Adeline Aircraft Financing Co. (AAF), an issuer in the business of financing private aircraft. You, a senior auditor...

ABC Inc. currently has zero debt. Its free cash flow last year was $75,000, and it is a zero growth company. ABC's current WACC is 12.25%, and its tax rate is 35%. The firm has 20,000 shares of...

Can you solve this question by showing steps? The answer to this Q is $33.78. Thank You! a 10) ABC Inc, currently has zero debt. Its free cash flow last year was $75,000, and it is a zero growth...

Hi There, I need someone to help me with the attached finance worksheet. There are 3 problems in this excel file - one problem on each individual tab. I am attaching a couple of additional files as...

Assignment - An Individual Assignment Use the assumptions, ratios and data provided to develop a forecast of the company financial statements for the next five 1 years (2019 to 2023) after preparing...

Hello Ruchi, I hope you have been doing good! I have attached the instructions word document and the excel workbook for part 5. This is the continuation from part 4. Please let me know if you have...

Huazhu Hotels Group (HTHT) is a leading multi-brand hotel group in China. As per HTHT website: "As of June 30.2020, we had 6,187 hotels in operation, including 758 leased and owned hotels and 5,429...

I would like to get step by step calculation on each ratio (answered already provided), please refer to the attached Celgene and Gilead financial statement. Thank you. Students' Name: Ashley Tallman...

Please answer all questions on attached word document. Please show all work when doing the problems. Thanks. EMC Corporation has never paid a dividend. Its current free cash flow of $400,000 is...

What is linear programming?

A cube of copper has sides of 2.0 cm. If it is drawn out to form a 14-gauge wire, what will its resistance be?

Differentiate the following function. f ( t ) = 4 7 t 6 - 2 t 4 6 t f ' ( t ) =

Selected transactions for Capers Company during October of the current year are listed in Problem 6-1A. Instructions Journalize the entries to record the transactions of Capers Company for October...

Suppose the world originally had 10 trillion (10.0 x 10 12 ) barrels of oil. Use the data of exercise 25 to predict again when the oil will start to run out. Exercise 25 Suppose the world originally...

Let a k-PDA be a pushdown automaton that has k stacks. Thus a 0-PDA is an NFA and a 1-PDA is a conventional PDA. You already know that 1-PDAs are more powerful (recognize a larger class of languages)...

Let A be any language. Define DROP-OUT(A) to be the language containing all strings that can be obtained by removing one symbol from a string in A. Thus, DROP-OUT(A) = {xz| xyz A where x, z * , y ...

A handrail, which weighs 120 N and is 1.8 m long, was mounted to a wall adjacent to a small set of steps (Figure P4.26). The support at A has broken, and the rail has fallen about the loose bolt at B...

Consider the following LP Output - below. The objective coefficient of x increases to 3 , determine the new objective function value. Current Objective Function Value = $ 3 1 . 2 0 \ table [ [ ,...

Identify the pros and cons of relocating headquarters from big cities to rural areas from both HRM and business perspectives.

If the employees who are asked to relocate to Awaji Island from Tokyo hesitate to do so, how could Pasona manage such a situation? What would be the potential incentives for those reluctant employees...

How does the nature of employees work-life balance differ between working in a big city such as Tokyo and working in a rural area such as Awaji Island?