1)Green firm Inc. plans a bond issue for the near future and wants to estimate its current cost of debt capital. After talking with the firms investment banker, the firm's chief financial officer has determind that a 10-year maturity bond with a $1000 face value and 6% percent coupon can be sold to investor for a net proceeds of $800. If the synopticom tax rate is 34% what is the after tax cost of debt financing to the firm?

Calculate bond yield to maturity YTM______

Tax adjustment after tax cost of debt ____________

2)Calculating the cost of common stock financing: The Green firm Inc common shareholder anticipate recieving a $1.1 per share dividend next year, based on the fact they received $1 last year expect dividends to grow 10 percent next year. Furthermore, anaysts predict that dividends will continue to grow at a rate of 10 percent into the foreseeable future. If Talbot were to issue new common stock for $35 a share the firm would incur a $4.25 per share cost to sell the new shares. Based on the most recent closing price for the firms common stock, what would you estimate the cost of a common stock to be for the firm? what is the cost of a new common stock issue?

3)Calculating the cost of common stock financing using the CAPM: The Green firm beta coefficient is estimated to be 2.5. Furthermore, the risk-free rate of interest is currently 5 percent and the expected rate of return on a diversified portfolio of all common stock is 25%. Use the capital asset pricing model (CAPM) to estimate the cost of equity capital for Green firm.

4)The green firm is considering a new software that reduce labor costs associated with its cloud servers, for which the free cash flows are show in finance chart. If the firm has a 20% required rate of return, what is the NPV of the project? Should the company accept the project?

	YEAR	FREE CASH FLOW
OUTFLOW		$(80,000.00)
INFLOW	1	$30,000.00
INFLOW	2	$25,000.00
INFLOW	3	$20,000.00
INFLOW	4	$15,000.00
INFLOW	5	$10,000.00

5)Green firm is cnsidering the purchase of a new main frame server, which will cost $250,000 initially , to aid in credit billing and inventory management. The free cash flows resulting from this project are a follows.The required rate of return demanded by the firm is 15%. Determine the systems NPV. Should the firm accept this project?

		FREE CASH FLOW	RATE OF RETURN
INITIAL OUTLAY	YEAR	$(250,000.00)	15%
INFLOW	1	$100,000.00
INFLOW	2	$100,000.00
INFLOW	3	$100,000.00
	PV

6)The Green firm has many different software products, it has observed over a lengthy period that its product mix is rather constant. Management has notice the "normal" sales price per unit and a "normal" variable cost per unit. The "normal" sales price and variable cost per unit are calculated from the constand product mix. The selling price is $99 and the virable cost is $30. Total fixed costs for the firm are $340,000 per year. What is the break-even point in units produced and sold for the company durning the coming years?

7) The Green firm has fixed operating cost of $500,000 and pays variable cost equal to $150,000 with revenues of $950,000. What is the firms break-even sales level as follow.

8)The Green firm is planning to pay 2 million in dividends to its common stock holders.

net income

$2,000,000.00

cost per share

# of shares

$6,000,000.00

eps

$10.00

share outstanding after share repurchase

expected stock price

$6.00

dividend pay out per share

$6.00

dividend pay out per share

price/eps

X

price per share

9)

The Green firm plans to borrow $500,000 for 60 day period. At maturity the firm will repay the $500,000 princial amount plus $35,000 interest. The effective annual rate of interest for the loan can be estimated using the APR equation

principle

$500,000.00

interest

$35,000.00

time(days)

60

APR

10)

Computing the cash conversion cycle conversion cycle
days of sales outstanding	50
days of sales inventory	45
days of payable outstanding	30
what is the conversion cycle