Suppose Mullens Corporation considering three average-risk projects with the following costs and rates or Project Cost Expected Rate of Return 1 $2,500 21.00% 2 $3,000 28.00% 3 $2,750 29.00% Mullens estimates that it can issue debt at a rate of ra = 15.00% and a tax rate of T = 10.00%. It can issue preferred stock that pays a constant dividend of Dp = $20.00 per year and at Pp = $200.00 per share. Also, its common stock currently sells for Po= $20.00 per share. The expected dividend payment of the common stock is D₁ = $5.00 and the dividend is expected to grow at a constant annual rate of g = 5.00% per year. Mullens' target capital structure consists of ws = 75.00% common stock, wa = 15.00% debt, and wp = 10.00% preferred stock. According to the video, the after-tax cost of debt can be stated as approximately According to the video, the cost of preferred stock can be stated as of approximately Plugging in the values for rd and (7) yields an after-tax cost of debt of Plugging in the values for Dp and Pp yields a cost of preferred stock of

Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Expected Rate of Return TE Project Cost 1 $2,000 16.00% 2 3,000 15.00 5,000 13.75 4 2,000 12.50 The company estimates that it can issue debt at a rate of ra = 9%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $7.00 per year at $56.00 per share. Also, its common stock currently sells for $41.00 per share; the next expected dividend, D1, is $4.25; and the dividend is expected to grow at a constant rate of 6% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. a. What is the cost of each of the capital components? Do not round intermediate calculations. Round your answers to two decimal places. Cost of debt: % Cost of preferred stock: % Cost of retained earnings: % b. What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places. % c. Only projects…

A firm has two independent projects, each requiring investment of INR 3 million, but each of these have different risk profiles, i.e., different costs of capital as below: Project A 17%, Project B 7% IRRs for A and B are 20% and 9% respectively. The firm would maintain a 30:70 debt-equity ratio and expects its net income to be 6 million INR. If this firms maintains a residual dividend policy (all cash distributed as dividends), what will be the pay-out ratio for this firm?

Assume the company has weight of debt WD = 70%, cost of debt RD = 13%, for un-leveraged firm: Bu =1; the company has Tax Rate = 30%, risk-free rate Rf = 3%, Market Return = 10%, free cash flow FCF0 = 200 million, growth rate g = 4%. Use the following formula for beta of leveraged company: B = Bu [1+ (1-T) × (WD /WS)], What is the WACC and what is the value of the firm?