6E2

Question 2 (1 point)

Great Seneca Inc. sells $100 million worth of 27-year to maturity 14.39% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $981 for each $1,000 bond. The firm's marginal tax rate is 40%. What is the after-tax cost of capital for this debt financing?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

6B3

Great Seneca Inc. sells $100 million worth of 27-year to maturity 14.39% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $981 for each $1,000 bond. The firm's marginal tax rate is 40%. What is the after-tax cost of capital for this debt financing?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

6C3

Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $680,025.

Year 1: 189,200

Year 2: 141,300

Year 3: 192,700

Year 4: 164,900

Year 5: 187,000

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

6D1

Find the profitability index (PI) for the following series of future cash flows, assuming the companys cost of capital is 14.37 percent. The initial outlay is $457,779.

Year 1: $190,001

Year 2: $169,936

Year 3: $175,905

Year 4: $173,594

Year 5: $178,373

Round the answer to two decimal places.