Debt/Equity of project= Tax Rate Levered equity Debt Issue IR= repayment of principal = Find NPV (debt financing) S 40% 28% 15% 10.00 m 10% $3.20m retiring at the end of year 3.
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- RECAPITALIZATION Currently, Forever Flowers Inc. has a Capital structure consisting of 25% debt and 75% equity. Forever's debt currently has a 7% yield to maturity. The risk-free rate (rRF) is 6%and the market risk premium (rMrRF) is 7%. Using the CAPM, Forever estimates that its cost of equity is currently 14.5%. The company has a 40% tax rate. a. What is Forevers current WACC? b. What is the current beta on Forevers common stock? c What would Forever's beta be if the company had no debt in its capital structure? (That is, what is Forever's unlevered beta, buy? Forever's financial staff is considering changing its capital structure to 40% debt and 60% equity. If the company went ahead with the proposed change, the yield to maturity on the company's bonds would rise to 10.5%. The proposed change will have no effect on the companys tax rate d What would be the companys new cost of equity if it adopted the proposed change in capital structure? e. What would be the company's new WACC if it adopted the proposed change in capital structure? f. Based on your answer to part e, would you advise Forever to adopt the proposed change in capital structure? Explain.Use Table 8 to answer the next two questions. Assume the committed capital is $100, the management fee is 2.00%, and the carried interest is 20.00%. Year 2015 2016 2017 2018 2019 $5.40 What is the carried interest in 2019? Called-down Paid in capital Mgmt Fees $26 $31 $21 O $11.20 $9.12 $9.85 $10 $12 Table 8 Operating NAV before Carried NAV after Results Distributions Interest Distributions Distributions -$14 $6 $11 $41 $46 $5 $10Use Table 8 to answer the next two questions. Assume the committed capital is $100, the management fee is 2.00%, and the carried interest is 20.00%. Year Called-down Paid in capital Mgmt Fees $26 $31 $21 $10 $12 2015 2016 2017 2018 2019 What is the carried interest in 2019? O $9.85 O $5.40 $9.12 4 O $11.20 Table 8 Operating NAV before Carried NAV after Results Distributions Interest Distributions Distributions -$14 $6 $11 $41 $46 $5 $10 है
- Please fill in thr blank on the excel and show how you got the missing things.PLS ANSWER ASAP The source of funds for capital investment, which would hold true for all alternatives, is detailed in the table below. Source % of Capital Invest Requirement Cost of Money (%) Short term debt 16 12 Common stocks 2 15 Marketable securities ? 10 What is the MARR of the project? Answer in %, round your answer to 4 decimal places.Using the following information, calculate the RAROC. •Risk-Adjusted Return: $80,000•Loan Amount: $3,000,000•Capital Requirement: 10%•Capital Ratio: 75% a) 28.75% b) 33.33% c) 35.56% d) 38.25%
- Explain the table.Q6. Collateral Debt Obligations (CDOS) Consider a CDO with a total notional of $500 million, consisting of three tranches: Senior (75%), Mezzanine (15%), and Equity (10%). The underlying portfolio has a total expected loss of 6%. a. Calculate the expected losses for each tranche, assuming they follow the standard tranche subordination rules. b. If the actual realized losses are 30%, determine the losses allocated to each tranche. c. Plot a graph that shows how the payoff of the holders to the Mezzanine tranche owners varies with the value of the assets in the mortgage pool at the time of maturity. d. Represent this payoff as a combination of payoffs of options and risk-free debt for Mezzanine tranche. e. Suppose the CDO manager decides to create a fourth tranche, called the Super- Senior tranche, which has the highest priority in the cash flow waterfall. If the Super-Senior tranche is sized at 50% of the total notional, recalculate the expected losses for all tranches. (hint: Super-…Assume you have the following asset and liability in your Balance Sheet:Asset - Bond AModified Duration = 2.6 yearsValue= RM1.5 millionLiability - Bond BModified Duration = 3.1 yearsValue= RM1.0 million duration gap is 0.53 years, net worth reduce by 8000. What should or could you to achieve immunized balance sheet?
- Please fill in thr blank on the excel and show how you got the missing things. Thank you!B/S Leverage: LEVERAGE 2020 2019 2017 Debt/Total Capital 150.2% 2018 Debt/EBITDA 2.02x 6.3x 2.9x 89.0% 1.82x 8.4x 3.1x 41.9% 0.76x 44.7x 3.8x Times Interest Earned Fixed Charge Coverage 251.4% 3.75x 3x 1.9x a. Based on the leverage ratios above, describe what is happening to leverage at Gracenat Company AND provide two different and separate reasons why this might have happened. b. Based on these leverage ratios, what do you believe the outlook is for this company in two years (2022)? Please answer both the questionsB/S Leverage: LEVERAGE 2020 2019 2017 Debt/Total Capital 150.2% 2018 Debt/EBITDA 2.02x 6.3x 2.9x 89.0% 1.82x 8.4x 3.1x 41.9% 0.76x 44.7x 3.8x Times Interest Earned Fixed Charge Coverage 251.4% 3.75x 3x 1.9x a. Based on the leverage ratios above, describe what is happening to leverage at Gracenat Company AND provide two different and separate reasons why this might have happened. b. Based on these leverage ratios, what do you believe the outlook is for this company in two years (2022)?