1 PART 1 3 Mes Laboratories in has been operating for over this reas producing medications and food for pets and farm animals. Due to new growth opportunities they are interested in your expert opinion on a seis of is described below. 4 The firm has eapital case of 40 percent debt od 60 percent common equity, which the CPO considers to be the optimal capital tractare and plans to main it in the futute 3 Next year the fum forecast Temperhat (EPS) of $15 Mes Labs has one million common shares handing 6 The fim has a line of credit at the local bank at the following intense 7 Can bomow up to 56,000,000 interest rate the egoes to 10%. Somossbowe 5,000,000 The firm's interest subsidy taste is 25 percent 10 The fimplans to retain 10% of the forecasted Net income the mining 30% of the estimated products will be paid dividends to common shareholders testet 11 Creatly common the well for $110 and the expected earnings growth is 94. The flothon costs to maine coon teapital, equal 7% of the share price 11. Estimate the weighted wege costs of capital for Mas Labcodes 10 A) ARENar cost of debe 15 ) Cost of equity 16 ) Cost of new equity 10 2. Caleate the two Marginal cost of capital beskou show the most of total capital and much would be im Como quity and Detach post 10A) Teak point when the firm needs to brow at the higher cost of debt but still does not need to new equity 20 ) Tak point when the firm needs to starting new equity assed the retained aming). Notice that of this point the demisseady in the higher costo del a Calidate the Wrighted message cost of capital et all the local points found on Question ? how show the there wounts of capital that takes each WACC 24 A) Hefore the flomastoise new debit 25 ) With the highest cost of debt but before the firm has to issue wrquity 26C) With New cost of equity and at the most expensive cost of deb M N 0 Lax Laboratories Inc. has been operating for over this years producing medications and food for pets and fam amals Due to sew oth opportunities they are interested in your expert op case of a descubed below The firm has a target capital structure of 40 percent debt and 60 procent common equity, which the CFO considers to be the optimal capital tracte and plans to maintain it in the futur ext year the firm forecasts Earnings per the EPS) of $15. MatLabs has one million common sharoitidin The firm has a line of credit at the local back at the following interest rates anbouw up to $6,000,000 at an interest inte; the sate goes to 10% for amounts above $6.000.000 The firm's interest subsidy tastate is 25 percent. The fim plans to retain 70% of the forecasted Net income, the semaining 30% of the estimated profits will be paid as dividends to common shareholders best you Currently common shares sell for $110 and the expected eanings growth is 0%. The flotation costs to the common qual capital equal of the share price 1. Estimate the weighted average costs of capital for Mas Labout A) Aner-tax cost of debt B) Cost of equity C) Cost of new equity 2. Calculate the two Marginal cost of capital beak points show the amount of total capital and how much would be caled from Como liquity and Debt at each post A) Break point when the firm needs to borrow at the higher cost of debt but still does noted to se new equity B) Break point when the firm needs to start issuing new equity has exhausted the retained eaming). Notice that this point the firm is already in the higher cost of 3 Calculate the weighted average cost of capital at all the beak points found on Question above Show the the amounts of capital that each WACC A) Before the firm has to issue new det 5) with the highest cost of debt but before the firm has to see new equity 6C) With New cost of equity and at the most expensive cost of debt PART 2 De Tom 1 PART 1 3 Mes Laboratories in has been operating for over this reas producing medications and food for pets and farm animals. Due to new growth opportunities they are interested in your expert opinion on a seis of is described below. 4 The firm has eapital case of 40 percent debt od 60 percent common equity, which the CPO considers to be the optimal capital tractare and plans to main it in the futute 3 Next year the fum forecast Temperhat (EPS) of $15 Mes Labs has one million common shares handing 6 The fim has a line of credit at the local bank at the following intense 7 Can bomow up to 56,000,000 interest rate the egoes to 10%. Somossbowe 5,000,000 The firm's interest subsidy taste is 25 percent 10 The fimplans to retain 10% of the forecasted Net income the mining 30% of the estimated products will be paid dividends to common shareholders testet 11 Creatly common the well for $110 and the expected earnings growth is 94. The flothon costs to maine coon teapital, equal 7% of the share price 11. Estimate the weighted wege costs of capital for Mas Labcodes 10 A) ARENar cost of debe 15 ) Cost of equity 16 ) Cost of new equity 10 2. Caleate the two Marginal cost of capital beskou show the most of total capital and much would be im Como quity and Detach post 10A) Teak point when the firm needs to brow at the higher cost of debt but still does not need to new equity 20 ) Tak point when the firm needs to starting new equity assed the retained aming). Notice that of this point the demisseady in the higher costo del a Calidate the Wrighted message cost of capital et all the local points found on Question ? how show the there wounts of capital that takes each WACC 24 A) Hefore the flomastoise new debit 25 ) With the highest cost of debt but before the firm has to issue wrquity 26C) With New cost of equity and at the most expensive cost of deb M N 0 Lax Laboratories Inc. has been operating for over this years producing medications and food for pets and fam amals Due to sew oth opportunities they are interested in your expert op case of a descubed below The firm has a target capital structure of 40 percent debt and 60 procent common equity, which the CFO considers to be the optimal capital tracte and plans to maintain it in the futur ext year the firm forecasts Earnings per the EPS) of $15. MatLabs has one million common sharoitidin The firm has a line of credit at the local back at the following interest rates anbouw up to $6,000,000 at an interest inte; the sate goes to 10% for amounts above $6.000.000 The firm's interest subsidy tastate is 25 percent. The fim plans to retain 70% of the forecasted Net income, the semaining 30% of the estimated profits will be paid as dividends to common shareholders best you Currently common shares sell for $110 and the expected eanings growth is 0%. The flotation costs to the common qual capital equal of the share price 1. Estimate the weighted average costs of capital for Mas Labout A) Aner-tax cost of debt B) Cost of equity C) Cost of new equity 2. Calculate the two Marginal cost of capital beak points show the amount of total capital and how much would be caled from Como liquity and Debt at each post A) Break point when the firm needs to borrow at the higher cost of debt but still does noted to se new equity B) Break point when the firm needs to start issuing new equity has exhausted the retained eaming). Notice that this point the firm is already in the higher cost of 3 Calculate the weighted average cost of capital at all the beak points found on Question above Show the the amounts of capital that each WACC A) Before the firm has to issue new det 5) with the highest cost of debt but before the firm has to see new equity 6C) With New cost of equity and at the most expensive cost of debt PART 2 De Tom