Question 1. WACC   Cost of Debt     After-tax cost of debt   4.90%       Cost of Equity   Treasury Bond Rate (risk free rate) 5% Beta 0.48 Risk premium 7%               Years 2014 2015 2016 2017 Capital Structure         Debt 22% 25% 28% 27% Equity 78% 75% 72% 73%             Please calculate following for each of the year from 2014 to 2017 Cost of Debt (before tax) Cost of Equity WACC (Weighted Average Cost of Capital)

Discuss the overarching idea of Asset Liability Management and its key objectives. How does the process of Gap Analysis support Asset Liability Management?

Consider the following average annual returns: Average Return 23.5% 13.1% 7.5% 6.8% 4% Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 1.8% OB. 0% OC. 7% OD. 3.5%

What is the weighted-average cost of capital for SKYE Corporation given the following information? Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt. Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. Weighted-average cost of capital % 1 million. $ 35 7.68% $14 million 9% 7% 0.75 7.0% 40%

The Crane Products Co. currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,418.61 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $11 per share. The preferred shares pay an annual dividend of $1.20. Crane also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Crane is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy…

1 2 Debt Ratio (current) 3 Equity Ratio (current) 4 Cost of Debt 5 Market Risk Premium 6 Equity Beta 7 Debt Beta 8 Risk Free Rate 9 Corporate Tax Rate 10 11 12 a. Cost of Equity 13 b. WACC 14 c. 15 Unlvered beta 16 Debt to Equity Ratio 17 Debt to Equity Beta 18 Cost of Equity 19 Debt to Ratio Given 20 Equity Ratio 21 Revised WACC 22 Solution 30.00% 70.00% 6.00% 5.25% 1.20% 0.29 4.50% 35.00% 40%

What is the EPS in the following case? Debt : Equity ratio = 3:1 Total Capital employed = 20,00,000 Interest rate for debt = 8%, Tax rate = 40% Price per share = 100 EBIT = 4,00,000   a. 35.74 b. 33.6 c. 35.2 d. 31.85

Finance Question

options:   A)11.5%   B)10.1%   C)5.1%   D)7.35%

2. Compute the overall cost of capital based the following data. Which weight is preferable? Why? Descriptions Equity Debt Preference Shares TOTAL Specifi c cost of capital 20% 10% 14% Marginal Weights Amount Proportion S 200 700 200 1100 S 0.18 0.64 0.18 1.00 Book Value Weights Amounts Proportions 300 400 100 800 0.38 0.50 0.13 1.00 Market Value Weights Amount Proportions S 600 800 200 1600 0.4 0.5 0.1 1.00