4) Corporate bonds for UCD Inc. have an annual yield to maturity of 12% and market value of $18,000. Preferred shares of UCD Inc. just paid a dividend of $1 per share and are expected to grow by 2% every year. The market discount rate for UCD Inc. preferred shares is 8% and there are 1000 preferred shares outstanding. Common shares of UCD Inc. currently are $2 per share with 15000 shares outstanding. The market discount rate for common shares is 15%. The tax rate is 20% for all corporations. . If historically the P-E ratio is 15 for corporations like UCD Inc. and UCD Inc's most recent profit was $1500, is UCD Inc.'s stock over or under-valued by the market based on the P-E Ratio? Calculate the weighted average cost of capital for UCD Inc. UCD Inc. does not pay dividends on its common shares. It's free cash flow today was $5000. That is projected to increase for the next three years by 10% annually. After that it is only projected to increase by 3% forever after. Calculate the estimated value of UCD Inc. today using the WACC you calculated in part b). What is the estimated share price of UCD Inc. based on your calculation in part c)? Based on the estimated share price of UCD Inc. in part c), is UCD Inc. over- or under-valued? Briefly explain. d) e 4) Corporate bonds for UCD Inc. have an annual yield to maturity of 12% and market value of $18,000. Preferred shares of UCD Inc. just paid a dividend of $1 per share and are expected to grow by 2% every year. The market discount rate for UCD Inc. preferred shares is 8% and there are 1000 preferred shares outstanding. Common shares of UCD Inc. currently are $2 per share with 15000 shares outstanding. The market discount rate for common shares is 15%. The tax rate is 20% for all corporations. . If historically the P-E ratio is 15 for corporations like UCD Inc. and UCD Inc's most recent profit was $1500, is UCD Inc.'s stock over or under-valued by the market based on the P-E Ratio? Calculate the weighted average cost of capital for UCD Inc. UCD Inc. does not pay dividends on its common shares. It's free cash flow today was $5000. That is projected to increase for the next three years by 10% annually. After that it is only projected to increase by 3% forever after. Calculate the estimated value of UCD Inc. today using the WACC you calculated in part b). What is the estimated share price of UCD Inc. based on your calculation in part c)? Based on the estimated share price of UCD Inc. in part c), is UCD Inc. over- or under-valued? Briefly explain. d) e