Suppose Caterpillar, Inc., has 658 million shares outstanding with a share price of $75.47, and $25.39 billion in debt. If in three years, Caterpillar has 697 million shares outstanding trading for $82.88 per share, how much debt will Caterpillar have if it maintains a constant debt-equity ratio? The amount of debt required in three years will be $ billion. (Round to two decimal places.)

Suppose Caterpillar, Inc., has 658 million shares outstanding with a share price of $75.47, and $25.39 billion in debt. If in three years, Caterpillar has 697 million shares outstanding trading for $82.88 per share, how much debt will Caterpillar have if it maintains a constant debt-equity ratio? The amount of debt required in three years will be $ billion. (Round to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Wei Corporation expects next year's net income to be $10 million. The firm is currently financed with 55% debt. Wei has $8 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assuming all payments are in the form of dividends), how large should Wei's dividend payout ratio be next year? Round your answer to two decimal places.
Your firm has an ROE of 12.1%, a payout ratio of 21%, $581,200 of stockholders' equity, and $366,400 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue? The sustainable growth rate is %. (Round to three decimal place.)
Cede & Co. expects its EBIT to be $83,929 every year forever. The firm can borrow at 11%. Cede currently has no debt, and its cost of equity is 23%. The tax rate is 34%. What is the firm’s WACC after borrowing $45,000 and using the proceeds to repurchase shares (i.e., after recapitalization)? Answer in percentage terms and round to 2 decimal places.
Sora Industries has 62 million outstanding shares, $124 million in debt, $47 million in cash, and the following projected free cash flow for the next four years: a. Suppose Sora's revenue and free cash flow are expected to grow at a 3.6% rate beyond year four. If Sora's weighted average cost of capital is 14.0%, what is the value of Sora stock based on this information? b. Sora's cost of goods sold was assumed to be 67% of sales. If its cost of goods sold is actually 70% of sales, how would the estimate of the stock's value change? c. Return to the assumptions of part (a) and suppose Sora can maintain its cost of goods sold at 67% of sales. However, the firm reduces its selling, general, and administrative expenses from 20% of sales to 16% of sales. What stock price would you estimate now? (Assume no other expenses, except taxes, are affected.) d. Sora's net working capital needs were estimated to be 18% of sales (their current level in year zero). If Sora can reduce this requirement…
The Dell Corporation has reported the BV of common equity of $10 billion at the end of 2020, with 400 million shares outstanding. The required rate of return is 5%. The company trades in the stock market for $30. calculate the price-to-book ratio.
Krell Industries has a share price of $21.81 today. If Krell is expected to pay a dividend of $1.18 this year and its stock price is expected to grow to $24.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is%. (Round to one decimal place.)
Krell Industries has a share price of $21.55 today. If Krell is expected to pay a dividend of $1.08 this year and its stock price is expected to grow to $24.57 at the end of the year. The dividend yeild is? (Round to one decimal place)The capital rate gain is? (Round to one decimal place)The total return is? (Round to one decimal place)
Sunland Corp. is expected to grow rapidly at a rate of 35 percent for the next seven years. The company's first dividend, to be paid three years from now, will be $5. After seven years, the company (and the dividends it pays) will grow at a rate of 8.40 percent. What is the value of Sunland stock with a required rate of return of 14 percent? (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)
Krell Industries has a share price of $22.35 today. If Krell is expected to pay a dividend of $0.84 this year and its stock price is expected to grow to $24.51 at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is 3.8%. (Round to one decimal place.) The capital gain rate is 13.42 %. (Round to one decimal place.)
Suppose that Papa Bell, Inc.'s equity is currently selling for $56 per share, with 4.1 million shares outstanding. Assume the firm also has 18,000 bonds outstanding, and they are selling at 95 percent of par. What are the firm's current capital structure weights? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Krell Industries has a share price of $21.92 today. If Krell is expected to pay a dividend of $1.11 this year and its stock price is expected to grow to $24.16 at the end of the year, what is Krell's dividend yield and equity cost of capital? The dividend yield is %. (Round to one decimal place.) %. (Round to one decimal place.) The total return is %. (Round to one decimal place.) The capital gain rate is
Next year, BHH Co. is expected to pay a dividend of $3.12 per share from earnings of $4.98 per share. The equity cost of capital for BHH is 12.3%. What should BHH's forward P/E ratio be if its dividend growth rate is expected to be 4.2% for the foreseeable future? The forward P/E ratio is (Round to two decimal places.)

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