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NEW QUESTION: 1
Gulf Electric Company (GEC) uses only debt and equity in its capital structure. It can borrow unlimited amounts at an interest rate of 10 percent so long as it finances at its target capital structure, which calls for
55 percent debt and 45 percent common equity. Its last dividend was $2.20; its expected constant growth rate is 6 percent; its stock sells on the NYSE at a price of $35; and new stock would net the company $30 per share after flotation costs. GEC's tax rate is 40 percent, and it expects to have $100 million of retained earnings this year. GEC has two projects available: Project A has a cost of $200 million and a rate of return of 13 percent, while Project B has a cost of $125 million and a rate of return of 10 percent. All of the company's potential projects are equally risky. What is GEC's cost of equity from newly issued stock?
A. 12.29%
B. 10.00%
C. 13.33%
D. 12.66%
E. 13.77%
Answer: E
Explanation:
Explanation/Reference:
Explanation:
k(d) (interest rate on the firm's new debt) = 10%
k(d)(1 - T) (after-tax-component cost of the debt) = 10%(0.6) = 6%.
D/A = 55%; D0 = $2.20; g = 6%; P0 = $35; PN = $35; T = 40%.
Retained earnings = $100M; BP(RE) = $100M/ .45 = $222.22M.
k(s) (component cost of retained earnings) = $2.33/$35 + 6% = 12.66%.
k(e) (component cost of external equity) = $2.33/$30 + 6% = 13.77%.

NEW QUESTION: 2
A new BackEnd engineer wants to be informed about all news (downloads and documents, flashes, redbooks, recent APARs. Technotes) for a set of products.Where can this information be found?
A. IBM Your News Lotus Notes Database
B. IBM ISST Workbench
C. IBM My notifications webpage
D. IBM Intranet Page
Answer: D

NEW QUESTION: 3
Place the following steps in the correct order to create a Virtualized Service for a UFT test.
A. Run the test with a virtualized service
B. Set the data and performance models for the virtualization project
C. Deploy the Service Virtualization server
D. Use the virtualization project in your GUI or API test
E. Add a virtualization project to your test in UFT and deploy the project
Answer: A,B,C,D,E
Explanation:
Reference: http://uft-help.saas.hpe.com/en/12.53/UFT_Help/Content/User_Guide/concept_using_virtual_services_overview.htm
http://uft-help.saas.hpe.com/en/12.53/UFT_Help/Content/User_Guide/concept_virtual_service_data_performance_models.htm