1.

Garden Tools Inc. has bonds, preferred stock, and common stocks outstanding. The number of securities outstanding, the current market price, and the required rate of return for these securities are stated in the table below. The firms tax rate is 35%.

Calculate the firm's WACC adjusted for taxes using the market information in the table.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

	The Number of Securities Outstanding	Selling price	The Required Rate of Return
Bonds	1,714	$1,038	10.76%
Preferred Stocks	5,113	$66.58	16.80%
Common Stocks	1,925	$119.00	16.20%

Your Answer:

2.

Deep Waters, Inc. is using the internal rate of return (IRR) when evaluating projects. Find the IRR for the companys project. The initial outlay for the project is $468,900. The project will produce the following after-tax cash inflows of

Year 1: 176,300

Year 2: 100,000

Year 3: 128,300

Year 4: 123,700

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

3.

Great Seneca Inc. sells $100 million worth of 27-year to maturity 10.81% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $975 for each $1,000 bond. The firm's marginal tax rate is 40%. What is the after-tax cost of capital for this debt financing?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

Your Answer:

4.

Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the companys project, assuming the companys cost of capital is 8.93 percent. The initial outlay for the project is $452,077. The project will produce the following after-tax cash inflows of

Year 1: 122,575

Year 2: 72,326

Year 3: 184,923

Year 4: 195,164

Round the answer to two decimal places.

Your Answer:

5.

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Minings cost of capital is 6.46 percent. What is the PI of a project if the initial costs are $2,072,340 and the project life is estimated as 5 years? The project will produce the same after-tax cash inflows of $662,495 per year at the end of the year.

Round the answer to two decimal places.

Your Answer: