4.2 calc

xlsx

School

Texas Tech University *

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Course

5320

Subject

Finance

Date

Apr 3, 2024

Type

xlsx

Pages

9

Uploaded by koolbabu007

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Questions 1 - 8 Debt PS Bonds 900,000 Shares FV $1,000 Price Price 85% Div TTM 12 CPN 7% Wd Semiannual Wps Wcs E(Rm) 9% rf 5% Tax Rate 21% Rd? 0.0908 AT_Rd? 0.0717 Rps? 0.0833 Rcs? 0.0988 WACC? 0.0948 Questions 9 - 10 D/A 0.78 D Asset Cost $75,000,000 E A Fe 9% Fd 4% float %? 0.0510 Amount Raise? $79,030,558.48 Suppose Westerfield Co. has the following financial information: Debt: 900,000 bonds outstanding with a face value of $1,000. The bonds currently trade at 85% of par and have 12 years to maturity. Th Preferred stock: 600,000 shares of preferred stock outstanding; currently trading for $108 per share, paying a dividend of $9 annually. Common stock: 25,000,000 shares of common stock outstanding; currently trading for $185 per share. Beta equals 1.22. Market and firm information: The expected return on the market is 9%, the risk-free rate is 5%, and the tax rate is 21%. Turtle Co. has a total debt ratio of 0.78. The company is considering building a new plant for $75 million. When the com on new debt is 4%. Calculate the weighted average flotation costs. (Enter percentages as decimals and round to 4 decim
Question 11 We 65% Wd 35% Re 12% Rd 5% AT_Rd 3.95% Tax Rate 21% WACC? 0.0918 Question 12 Years 10 CPN 5% Semiannual Par $1,000 Price 103% Tax Rate 21% Rd? 0.0462 AT_Rd? 0.0365 Question 14 Div_1 $3 g 3% P0 $51.33 XYZ Inc.'s target capital structure is 65% equity and 35% debt. Its cost of equity is 12%, and the befo tax rate is 21%. Calculate the WACC for the firm. (Enter percentages as decimals and round to 4 dec Tomtom Co. issued a 10-year bond, with a coupon of 5%, making semiannual payments and a par v company's tax rate is 21%. Calculate the before-tax cost of debt. (Enter percentages as decimals an Jaffe Co. will pay a dividend of $3 per share one year from today. Dividends are expected to grow a Calculate the cost of common stock for the firm. (Enter percentages as decimals and round to 4 de
Rcs? 0.0884 <<D1/P0 + g Question 15 Debt $1,500,000,000 Rd 6.50% AT_Rd? 0.0514 Mkt cap $4,400,000,000 <<shares * price Rcs 12% Tax Rate 21% Year 0 NWC $100,000,000 1 Asset Cost $175,000,000 2 Straight Line Depr $35,000,000 3 4 Wd? 0.2542 5 We 0.7458 WACC? 0.1025 Risk Adj WACC? 0.1225 OCF_1? $155,870,000 OCF = EBIT + Depr - Taxes NPV? $339,451,678.46 The Rare Find Co. has the following information: Debt outstanding: $1,500 million The before-tax cost of debt: 6.5% Market cap: $4,400 million Cost of common stock: 12% Tax rate: 21% Rare Find is evaluating a project with the following inform Over the next five years, EBIT will equal 153 million each An investment of $100 million is required in net working will be recovered at the end. The equipment cost will be $175 million, depreciated usi project's life, with no salvage value. The project requires an additional 2% risk premium abov
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CS Debt 600,000 Shares 25,000,000 PS $108 Price $185 CS $9 Beta 1.22 Total 0.1402 0.0119 0.8479 78 Wd 0.78 22 We 0.22 100 he coupon rate equals 7%, and the bonds make semiannual interest payments mpany issues new equity, it incurs a flotation cost of 9%. The flotation cost mals)
ore-tax cost of debt is 5%. The relevant cimals) value of $1,000. The bond currently sells for 103% of par. The nd round to 4 decimals) at 3% forever. The stock is currently trading at $51.33 per share. ecimals)
0 1 2 3 4 EBIT $153,000,000 $153,000,000 $153,000,000 $153,000,000 Taxes $32,130,000 $32,130,000 $32,130,000 $32,130,000 Net Income $120,870,000 $120,870,000 $120,870,000 $120,870,000 CF ($275,000,000) $155,870,000 $155,870,000 $155,870,000 $155,870,000 $255,870,000 mation: h year g capital at the beginning of the project, which ing the straight-line method to zero over the ve the firm's WACC.
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$765,000,000 $64,800,000 $4,625,000,000 $5,454,800,000
5 $153,000,000 $32,130,000 $120,870,000
1 0.8479 0.8479 2 0.1402 0.1402 3 0.0119 0.0119 4 0.0908 0.0908 5 0.0717 0.0717 6 0.0833 0.0833 7 0.0988 0.0988 8 0.0948 0.0948 9 0.0510 0.0510 10 79,030,558.48 79,030,558.48 11 0.0958 0.0918 12 0.0462 0.0462 13 0.0365 0.0365 14 0.0584 0.0884 15 0.2542 0.2542 16 0.0514 0.0514 17 0.1025 0.1025 18 0.1225 0.1225 19 155,870,000 155,870,000 20 339,451,678.46 339,451,678.46
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