Give only typing answer with explanation and conclusion if D/V=50%, S/V=40%, and P/V=10%. Additionally, Kd=10%, Dp=6, Ppn=40, and Rf=6%, market risk premium=10% and beta=1.5. If the tax rate is 30%, then the weighted average cost of capital is? A. 14.90% b. 13.40% c. 17% d. 11.60%
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- g. Calculate Pi in each of the following instances: a. Div Yield % = 6%, Total Return % = 16%, Po = $10 b. Capital Gain% = 8%, Div Yield % = 5%, D1 = $3 c. Capital Gain % = 10%; Do = $2; growth = 4%; Po = $40Can you answer these in Excel (and show any calculation formulas). See the attached image for the information. 1. What is the payack period, NPV, IRR? 2. What happens to the NPV and IRR if initial capital goes up 30%? 3. How much would the selling price have to increase to compensate for 30% in capital costs to the original level in 1.? 4. What is your recomendation?(b) Find the time path of capital K(t) given the following rates of net investment flow functions (i) I(t) = 10t2 +5 K(0) = 50 (ii) I(t) = 18t5 - 2 K(0) = 24 (iii) I(t) = 30t4 K(0) = 35 %3D (iv) I(t) = 23t K(0) =15
- (b) Find the time path of capital K(t) given the following rates of net investment flow functions (i) I(t) = 10t12 + 5 K(0) = 50 (ii) I(t) = 18t5 - 2 K(0) = 24 (iii) I(t) = 30t4 K(0) = 35 (iv) I(1) = 23t K(0) =15 (c) For each of (i) to (iv) in b above, find the amount of capital formation over the time interval (2,5]1. Using capital asset pricing model, compute for the cost of equity with risk-free rate of 4%, market return on 8%, beta of 1.5 and tax rate of 30%. 2. With risk-free rate of 5%, beta of 1.5, market return of 8%, prevailing credit spread (rate applied on debt on top of risk-free rate) of 3%, tax rate of 30% and equity ratio of 30%, compute for the weighted average cost of capital. 3. The appropriate WACC of a company is 8%. With risk-free rate of 4%, market return of 10%, prevailing credit spread of 2%, tax rate of 30% and equity ratio of 40%, compute the beta.MCQ'S: 1) Determine the pure project beta of a project that has 30% debt and 70% equity. The beta for the company is 1.4, and it has a tax rate of 40%. a.1.11 b.1.83 c.1.05 d.1.56 2) In many instances, book value, rather than market value, may be used to determine the weighted average cost of capital. This is because of all of the following EXCEPT __, a.many firms have several different issues of debt which may not be publicly held b.the market prices of the various sources of capital are not easily estimated c.market values change daily d.book value is a more accurate value in determining the actual cost of capital 3) For firms subject to the 40% marginal tax rate, the after-tax cost of __ is roughly three-fifths the cost of preferred stock. a.retained earnings b.new common stock c.long-term debt d.None…
- Calculate the FCF for a firm if it has operating cash flows of 500, CAPEX of 320, and a change in NWC of -18. Assume a tax rate of 40%. Hint: Even if an input value is negative, you still apply the formula with the minus signs. FCF = operating CF - CAPEX - change in NWC Also a reminder, FCF = CF from assetsh. Calculate the total return % in each of the following instances: a. Do = $2.00, dividend growth = 4%, Po = $50, P: = $60 b. Po = $32, Dividend yield % = 5%, P1 = $30 c. Dividend Yield = 4%; Capital Gain = $20; D1 = $4Use this problem to answer numbers 1 to 3. (1) If the cost of equity were 12%, then the weighted average cost of capital under Arrangement #1, to the nearest full percentage point, would be
- The five alternatives shown below are being evaluated by the rate of return method. Incremental ROR when compared with alternative B C D 27.3 9.4 35.3 25 E 1.5 38.5 24.4 Alt B D E Initial Invest, $ ROR vs DN,% 9.6 15.1 -25,000 -35,000 -40,000 -60,000 -75,000 13.4 25.4 20.2 A --- --- (d) Alt D 46.5 27.3 6.8 ... If the projects are mutually exclusive and the Minimum Attractive Rate of Return is 9.2% per year, the best alternative is: (a) Alt A (b) Alt B (c) Alt C (e) Alt ECalculate the Weighted Average Cost of Capital (WACC) for McCormick and Company using the formula WACC = (WD x RD x (1-T)) + (WS x Rs) Note that -- Rs = the cost of equity Rd = the cost of debt T = the tax rate WD = Value of debt / (Value of debt plus value of equity) WS = Value of equity / (Value of debt plus value of equity) **Note that the weight of debt plus the weight of equity must total to 100%, as there are only two components in the capital structure.** In order to estimate the weights of debt and equity in the total capital structure, the CFO suggests using the book value of debt and the market value of equity. To determine the book value of debt, use data from the year end November 2019 McCormick 10-K. Look on the Balance sheet and add the following -- Short term borrowings, Current portion of long term debt, and Long term debt. To determine the market value of equity, use the following data: On March 17, 2020 the market value of equity (or "Market Cap")…1. Using the Capital Asset Pricing Model (CAPM), what's this company's cost of common equity? ·Expected market return = 10% Risk-free rate = 4% Beta = 1.3