Abc co. and xyz co. are identical firms in all respects except for their capital structure. abc is all equity financed with $775,000 in stock. xyz uses both stock and perpetual debt; its stock is worth $387,500 and the interest rate on its debt is 5.8 percent. both firms expect ebit to be $77,000. ignore taxes.

a) richard owns $58,125 worth of xyz’s stock. what rate of return is he expecting? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

b) suppose richard invests in abc co. and uses homemade leverage to match his cash flow in part (a). calculate his total cash flow and rate of return. (do not round intermediate calculations. enter your return answer as a percent rounded to 2 decimal places, e. g., 32.16.)

c) what is the cost of equity for abc and xyz? (do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. g., 32.16.)

d) what is the wacc for abc and xyz? (do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. g., 32.16.)

In the fall, jay thompson decided to live in a university dormitory. he signed a dorm contract under which he was obligated to pay the room rent for the full college year. one clause stated that if he moved out during the year, he could sell his dorm contract to another student who would move into the dormitory as his replacement. the dorm cost was $5000 for the two semesters, which jay had already paid a month after he moved into the dorm, he decided he would prefer to live in an apartment. that week, after some searching for a replacement to fulfill his dorm contract, jay had two offers. one student offered to move in immediately and to pay jay $300 per month for the eight remaining months of the school year. a second student offered to move in the second semester and pay $2500 to jay. jay estimates his food cost per month is $500 if he lives in the dorm and $450 if he lives in an apartment with three other students. his share of the apartment rent and utilities will be $404 per month. assume each semester is 4.5 months long. disregard the small differences in the timing of the disbursements or receipts. what is the cost of the cheapest alternative?

Omnidata uses the annualized income method to determine its quarterly federal income tax payments. it had $100,000, $50,000, and $90,000 of taxable income for the first, second, and third quarters, respectively ($240,000 in total through the first three quarters). what is omnidata's annual estimated taxable income for purposes of calculating the third quarter estimated payment?

About 20 years ago, sturdy light, inc., produced a sturdy, lightweight backpack in a market that was rapidly growing. sturdy light became a leader in this market. eventually, the backpack market reached the maturity stage and slowed down. however, by this time, sturdy light had developed a strong brand name and continued to steadily lead the market. which of the following describes this scenario? a. sturdy light was a star that developed into a cash cow. b. sturdy light was a question mark that developed into a star. c. sturdy light was a dog that developed into a question mark. d. sturdy light was a cash cow that developed into a star.