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 33 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
Gracias!

xoxo123

  • Member
  • Posts: 335
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

The first documented use of surgical anesthesia in the United States was in Connecticut in 1844.

Did you know?

During the twentieth century, a variant of the metric system was used in Russia and France in which the base unit of mass was the tonne. Instead of kilograms, this system used millitonnes (mt).

Did you know?

Nearly 31 million adults in America have a total cholesterol level that is more than 240 mg per dL.

Did you know?

Oliver Wendell Holmes is credited with introducing the words "anesthesia" and "anesthetic" into the English language in 1846.

Did you know?

Long-term mental and physical effects from substance abuse include: paranoia, psychosis, immune deficiencies, and organ damage.

Median Annual Earnings of Full-Time Workers, by Gender, 1960–2010 Median Annual Earnings of Full-Time Workers, by Gender, 1960–2010
Do you know how many calories are in your chips-and-soda “study snack”? Do you know how many calories are in your chips-and-soda “study snack”?
Temperature gradient generates a global pattern of circulation Temperature gradient generates a global pattern of circulation
The annual pattern of rings changes with ocean temperature and coral health The annual pattern of rings changes with ocean temperature and coral health
An automobile engine provides 524 Joules of work to push the pistons and generates 2160 Joules ... An automobile engine provides 524 Joules of work to push the pistons and generates 2160 Joules ...
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
Video: Dendrite Animation

For a complete list of videos, visit our video library