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 23 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

dreamfighter72

  • Member
  • Posts: 355
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

Did you know?

Of the estimated 2 million heroin users in the United States, 600,000–800,000 are considered hardcore addicts. Heroin addiction is considered to be one of the hardest addictions to recover from.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

Methicillin-resistant Staphylococcus aureus or MRSA was discovered in 1961 in the United Kingdom. It if often referred to as a superbug. MRSA infections cause more deaths in the United States every year than AIDS.

Methicilli ...
During their annual migration, the entire population of Arctic terns move from the Arctic Ocean in t During their annual migration, the entire population of Arctic terns move from the Arctic Ocean in t
Soda Soda
Change in Annual Precipitation Over Land, 1901-2010 Change in Annual Precipitation Over Land, 1901-2010
The complete oxidation of 1 mole of glucose generates about 30–32 moles of ATP synthesized from ... The complete oxidation of 1 mole of glucose generates about 30–32 moles of ATP synthesized from ...
Average Annual Growth Rates of Population by Country Group Average Annual Growth Rates of Population by Country Group
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
Video: Genetic distance between human groups

For a complete list of videos, visit our video library