Submit your answer to each of the problems and show the calculations you used to arrive at the answer.

Submit your answer to each of the problems and show the calculations you used to arrive at the answer. You must show calculations to receive credit.

  1. Salinas Corporation has net income of $15 million per year on net sales of $90 million per year. It currently has no long-term debt but is considering a debt issue of $20 million. The interest rate on the debt would be 7%. Salinas currently faces an effective tax rate of 40%. What would be the annual interest tax shield to Salinas if it goes through with the debt issuance?
  2. Carbon8 Corporation wants to raise $120 million in a seasoned equity offering, net of all fees. Carbon8 stock currently sells for $28.00 per share. The underwriters will require a fee of $1.25 per share, and indicate that the issue must be underpriced by 7.5%. In addition to the underwriter’s fee, the firm will incur $785,000 in legal, administrative, and other costs. How many shares must Carbon8 sell in order to raise the desired amount of capital?
  3. FM Foods is evaluating its cost of capital. Use the following information provided on December 31, 2017, to estimate FM’s after-tax cost of equity capital.
    • Yield to maturity on long-term government bonds: 4.4%
    • Yield to maturity on company long-term bonds: 6.3%
    • Coupon rate on company long-term bonds: 7%
    • Historical excess return on common stocks: 6.5%
    • Company equity beta: 1.20
    • Stock price: $40.00
    • Number of shares outstanding (millions): 240
    • Book value of equity (millions): $5,240
    • Book value of interest-bearing debt (millions): $1,250
    • Tax rate: 35.0%

"96% of our customers have reported a 90% and above score. You might want to place an order with us."

Essay Writing Service
Affordable prices

You might be focused on looking for a cheap essay writing service instead of searching for the perfect combination of quality and affordable rates. You need to be aware that a cheap essay does not mean a good essay, as qualified authors estimate their knowledge realistically. At the same time, it is all about balance. We are proud to offer rates among the best on the market and believe every student must have access to effective writing assistance for a cost that he or she finds affordable.

Caring support 24/7

If you need a cheap paper writing service, note that we combine affordable rates with excellent customer support. Our experienced support managers professionally resolve issues that might appear during your collaboration with our service. Apply to them with questions about orders, rates, payments, and more. Contact our managers via our website or email.

Non-plagiarized papers

“Please, write my paper, making it 100% unique.” We understand how vital it is for students to be sure their paper is original and written from scratch. To us, the reputation of a reliable service that offers non-plagiarized texts is vital. We stop collaborating with authors who get caught in plagiarism to avoid confusion. Besides, our customers’ satisfaction rate says it all.

© 2022 Homeworkcrew.com provides writing and research services for limited use only. All the materials from our website should be used with proper references and in accordance with Terms & Conditions.