This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Pensacola Soda Inc. is all equity financed and generates perpetual annual EBIT of $300. Assume that ... (Read 63 times)

lindiwe

  • Hero Member
  • *****
  • Posts: 577
on: Apr 25, 2021
Pensacola Soda Inc. is all equity financed and generates perpetual annual EBIT of $300. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Pensacola has a 100% payout rate, 1,500 shares outstanding, and that shareholders require a return of 5%. Assume that the tax rate is 0%. 
Pensacola is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares at the price of $4.00 per share. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds worth a total sum of $1,200 and a coupon rate (and yield) of 3%. Assume that the tax rate is 0%.
If Pensacola goes ahead with the repurchase, then what is its WACC after the repurchase is complete?
◦ 3.0%
◦ 3.5%
◦ 4.5%
◦ 5.0%
◦ 5.5%
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by lindiwe on Apr 25, 2021

dyrone

  • Sr. Member
  • ****
  • Posts: 322
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 58% of students answer this correctly


lindiwe

  • Member
  • Posts: 577
Reply 2 on: Apr 25, 2021
YES! Correct, THANKS for helping me on my review

adf223

  • Member
  • Posts: 304
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

Did you know?

Walt Disney helped combat malaria by making an animated film in 1943 called The Winged Scourge. This short film starred the seven dwarfs and taught children that mosquitos transmit malaria, which is a very bad disease. It advocated the killing of mosquitos to stop the disease.

Did you know?

Fatal fungal infections may be able to resist newer antifungal drugs. Globally, fungal infections are often fatal due to the lack of access to multiple antifungals, which may be required to be utilized in combination. Single antifungals may not be enough to stop a fungal infection from causing the death of a patient.

Did you know?

More than 20 million Americans cite use of marijuana within the past 30 days, according to the National Survey on Drug Use and Health (NSDUH). More than 8 million admit to using it almost every day.

Tracking time of marker entry generates a chromosome map Tracking time of marker entry generates a chromosome map
Annual Earthquake Occurrence Annual Earthquake Occurrence
An automobile engine generates 2160 Joules of heat that must be carried away by An automobile engine generates 2160 Joules of heat that must be carried away by
For the circuit in Figure 1, assume ideal diodes. The peak inverse voltage is approximately For the circuit in Figure 1, assume ideal diodes. The peak inverse voltage is approximately
Jia's Fashions recently paid a $2 annual dividend. The company is projecting that its ... Jia's Fashions recently paid a $2 annual dividend. The company is projecting that its ...
An archaeological sample contains 0.700 g of lead-206 and 2.144 g of uranium-238. Assume that ... An archaeological sample contains 0.700 g of lead-206 and 2.144 g of uranium-238. Assume that ...
Video: Acid-base imbalances - compensation of metabolic acidosis and alkalosis

For a complete list of videos, visit our video library