6 You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 13 percent, which is paid semiannually. The yield to maturity on the bonds is 10 percent annual interest. There are 10 years to maturity. Use Appendix B and Arrendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods 18 points a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) 01:23 Bond price $ 446,59 eBook b. With 5 years to maturity. If yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds? (Do not round intermediate calculations, Round your final answer to 2 decimal places.) New bond price 3 570 DB 24 18 points The Nolan Corporation finds it is necessary to determine its marginal cost of capital. Nolan's current capital structure calls for 45 percent debt, 15 percent preferred stock, and 40 percent common equity Initially. common equity will be in the form of retained earnings (K) and then new common stock (R). The costs of the various sources of financing are as follows: debt after-tax 42 percent preferred stock, 6 percent retained earnings. 14 percent, and new common stock, 15.2 percent a. What is the initial weighted average cost of capital? (Include debt, preferred stock, and common equity in the form of retained earings, Kel(Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost 8.86 chool Debi Preferred stock Common equity Weighted average cost of capital b. If the firm has $26 million in retained earnings, at what size capital structure will the firm run out of retained earnings? Enter your answer in millions of dollars (e.g. $10 million should be entered as "10").) Capital structures $ 62 c. What will the marginal cost of capital be immediately after that point? (Equity will remain at 40 percent of the capital structure, but will all be in the form of new common stock, K. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) d. The 42 percent cost of debt referred to earlier applies only to the first $45 million of debt. After that, the cost of debt will be 65 percent At what size capital structure will there be a change in the cost of debt? (Enter your answer in millions of dollars les. $10 million should be entered as "10) $ milion e. What will the marginal cost of capital be immediately after that point? (Consider the facts in both parts cand do not round Intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Marginal cost of con