3) Macbeth Spot Removers (MSR) is an all equity financed firm, with 1000 outstanding stocks and...

    

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3) Macbeth Spot Removers (MSR) is an all equity financed firm, with 1000 outstanding stocks and market value per share = $10. Determine the spread of expected return per share between the super-optimistic scenario (earnings = $2000) and the pessimistic scenario (earnings = $800). a. Spread = 22% b. Spread = 32% Spread = 17% d. Spread = 12% C. 4) (Continuation) same computation assuming that the firm is financed 80 percent with debt, at a cost of 10 Do the but now percent per year. a. Spread = 60% b. Spread = 50% Spread = 40% C. d. Spread = 30% 5) (Continuation) Determine the value of the stock in the most optimistic scenario assuming 80 percent debt financing. $6/0.06=$100 a. b. $3/0.1-$30 $3/0.3 $10 C. d. $6/0.6 $10 3) Macbeth Spot Removers (MSR) is an all equity financed firm, with 1000 outstanding stocks and market value per share = $10. Determine the spread of expected return per share between the super-optimistic scenario (earnings = $2000) and the pessimistic scenario (earnings = $800). a. Spread = 22% b. Spread = 32% Spread = 17% d. Spread = 12% C. 4) (Continuation) same computation assuming that the firm is financed 80 percent with debt, at a cost of 10 Do the but now percent per year. a. Spread = 60% b. Spread = 50% Spread = 40% C. d. Spread = 30% 5) (Continuation) Determine the value of the stock in the most optimistic scenario assuming 80 percent debt financing. $6/0.06=$100 a. b. $3/0.1-$30 $3/0.3 $10 C. d. $6/0.6 $10

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The detailed answer for the above question is provided below 3 Correct Answer is d 12 Explanation The spread of expected return per share between the ... View the full answer