1. Consider the following company,

Book Value of Debt	$50 million
YTM	10%
Coupon	7%
Coupon Payments	semi-annually
Years	20
Corporate Tax Rate	33%
# of Preferred Shares	2 million
Price of Preferred Share	$25
Dividend per Preferred Shares	$1.33
# of Common Shares	9.5 million
Price of Common Share	$19
of Common Stock	1.3
Risk-Free Rate	4%
Market Return	10%

What is the market value of the debt? Enter your answer in terms of millions and rounded to 2 DECIMAL PLACES.

Enter your response below. million

2. Consider a firm that has a debt-equity ratio of 1/3. The rate of return for debt is 8% and the rate of return for equity is 14%. The corporate tax rate is 39%. What is the weighted average cost of capital? Enter your answer as a percentage and rounded to 2 DECIMAL PLACES. Do not include the percentage sign in your answer.

Enter your response below. %

3. Peaceful Cruises wants to build a new cruise ship that has an initial investment of $500 million. It is estimated to provide an annual cash flow over the next 10 years of $71 million per year. The discount rate is 6%.

What is the discounted payback period? Enter your answer rounded to two decimal places

4. Suppose a company had an initial investment of $40,000. The cash flow for the next five years are $12,000, $10,000, $15,000, $13,000, and $11,000, respectively.

What is the payback period? (Enter your answer rounded to 2 DECIMAL PLACES)

If the firm accepts projects with payback periods of less than 4 years, will this project be accepted?

Yes or No

5. Suppose a company had an initial investment of $45,000. The cash flow for the next five years are $18,000, $14,000, $20,000, $20,000, and $19,000, respectively. The interest rate is 10%. Enter your answer rounded to 2 DECIMAL PLACES.

What is the discounted payback period?

If the firm requires a discounted payback periods 3 years or less, will the project be accepted?

Yes or No