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NEW QUESTION: 1
Refer to the exhibit.

Which two statements about the network environment of router R1 must be true'? (Choose two )
A. The 10.0.0.0/8 network was learned via external EIGRP
B. The EIGRP administrative distance was manually changed from 90 to 170
C. there are 20 different network masks within the 10.0.0.0/8 network
D. Ten routes are equally load-balanced between Te0/1/0.100 and Te0/2/0.100
E. A static default route to 10.85.33.14 was defined
Answer: A,C

NEW QUESTION: 2
Which command gives an overview of your installed licenses?
A. cplic print
B. cplicense
C. fw lic print
D. showlic
Answer: A

NEW QUESTION: 3
Flood Motors is an all-equity firm with 200,000 shares outstanding. The company's EBIT is $2,000,000 and is expected to remain constant over time. The company pays out all of its earnings each year, so its earnings per share equals its dividends per share. The company's tax rate is 40 percent. The company is considering issuing $2 million worth of bonds (at par) and using the proceeds for a stock repurchase. If issued, the bonds would have an estimated yield to maturity of 10 percent. The risk-free rate in the economy is 6.6 percent, and the market risk premium is 6 percent. The company's beta is currently 0.9, but its investment banker's estimate that the company's beta would rise to 1.1 if they proceed with the recapitalization. Assume that the shares are repurchased at a price equal to the stock market price prior to the recapitalization. What would be the company's stock price following the recapitalization?
A. $76.03
B. $51.14
C. $56.02
D. $53.85
E. $68.97
Answer: B
Explanation:
Explanation/Reference:
Explanation:
First, find the company's current cost of capital, dividends per share, and stock price: k = 0.066 + (0.06)0.9
= 12%. To find the stock price, you still need the dividends per share or DPS = ($2,000,000 (1 -
0.4))/200,000 = $6.00. Thus, the stock price is Po = $6.00/0.12 = $50.00. Thus, by issuing $2,000,000 in new debt the company can repurchase $2,000,000/$50.00 = 40,000 shares.
Now after recapitalization, the new cost of capital, DPS, and stock price can be found: k = 0.066 + (0.06)
1.1 = 13.20%. DPS for the remaining (200,000 - 40,000) = 160,000 shares are thus [($2,000,000 - ($2,000,000 x 0.10))(1 - 0.4)]/160,000 = $6.75. And, finally, Po = $6.75/0.132 = $51.14.

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