Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

144. Given the following information for Jano Corp. find the WACC. Assume the company's tax rate is 35%. Bonds: 10,000 7% coupon bonds outstanding, $1,000

144. Given the following information for Jano Corp. find the WACC. Assume the company's tax rate is 35%. Bonds: 10,000 7% coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102 % of par; the bonds make semi-annual payments. Common Shares: 400,000 shares outstanding, selling for $50 per share; the beta is 1.15. Preferred shares: 25,000 shares of 5% preferred stock outstanding, currently selling for $65 per share. 8% market risk premium and 4% risk-free rate. A. 9.97 B. 10.17% C. 11.37% D. 12.57% E. 13.77%

120. Hartley, Inc. needs to purchase equipment for its 2,000 drive-ins nationwide. The total cost of the equipment is $2 million. It is estimated that the after-tax cash inflows from the project will be $210,000 annually in perpetuity. Hartley has a market value debt-to-assets ratio of 40%. The firm's cost of equity is 13%, its pre-tax cost of debt is 8%, and the flotation costs of debt and equity are 2% and 8%, respectively. The tax rate is 34%. Assume the project is of similar risk to the firm's existing operations. Ignoring flotation costs, what is the NPV of the proposed project? A. $33,966 B. $65,990 C. $98,542 D. $119,072 E. $128,034

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Financial Accounting Acc 201 College Of Southern Nevada

Authors: Weygandt. Kimmel. Kieso

13th Edition

1118742966, 978-1118742969

More Books

Students also viewed these Accounting questions

Question

=+Who should be recruited?

Answered: 1 week ago