Question
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$7.00 Market value / Stock Price - Multi Question
- From Business: Finance , Economics: Financial-Markets
- Closed, but you can still post tutorials
- Due on Jan. 07, 2008
- Asked on Dec 31, 2007 at 3:37:46PM
Q:Background Info:
Company – Mallard Corp.
Type = Zero-growth firm
Debt = Carries a market value debt of $1,000,000 carrying a coupon rate of 10%
EBIT total = $400,000
Current cost of capital = 15%
Corporate tax rate = 35%
Common stock outstanding = 100,000
A. Current total market value is ?
B. Current stock price is ?
C. Mallard recalls its debt above for repurchase, and reissues $ 1,200,000 in debt at a coupon rate of 12%. The required rate of return on equity will increase to 16%. Its new total market value will be ?
D. The firm’s new share price will be ?
E. Mallard has lease total lease payments of $ 120,000 and sinking fund payments totaling $ 100,000. Using the information from “A” and “B” above, their fixed coverage charge ratio is ?
