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Workbook IV Name Before beginning this problem you must enter the last four digits of your student ID#. The worksheets that follow will not be...

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Workbook IV Name Before beginning this problem you must enter the last four digits of your student ID#. The worksheets that follow will not be populated with your data until you enter the four digit code in this box. The following worksheets correspond to assignments for the individual units in this lesson. Once you have completed all of these worksheets, send the saved workbook to the instructor before the closing date for this lesson.
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Weight 25% 5% 70% Net Income $100,000 flotation 0.00% 5.00% 10.00% β 0.85 Price $1,003.75 $7.50 g 7.00% Par $1,000.00 $100.00 $1.00 T 25.00% Dividend $8.00 $0.75 C.S. Div Pay 35.00% Coupon 4.75% Market Information n 20 infinite infinite 11.50% m 2 4 4.75% Retained Earnings Break Point WORK AREA DoubleM has the following capital structure made up of debt, preferred stock, and common stock, which it considers to be optimal. DoubleM's net income is expected to be $100,000; its dividend payout ratio is 35%; tax rate is 25%; and investors expect earnings and dividends to grow at rate g in the future. The last dividend and current stock price are given. T-bonds yield r RF ; an average stock has a rate of return, r M ; and DoubleM's beta is 0.85. New common stock would have 10% flotation costs; new $100 par value preferred with $8 dividends would have the given flotations costs; and new debt would have the given coupon payments. Determine the breakpoint (the investment level at which the WACC would change), the WACC before and the WACC after the breakpoint. Long Term Debt Preferred Stock Common Stock Other Company Information r M r RF r d r p r s r e WACC 1 WACC 2
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Copy of WV.xls

Workbook IV Name Before beginning this problem you must enter the last four digits of your
student ID#. The worksheets that follow will not be populated with your
data until you enter the four...

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