Answer each question Individually and all parts of each question. There are a total of 8 questions.

Homework: Chapter 11 Homework Save Score: 0 of 1 pt 1 of 9 (0 complete) HW Score: 0%, 0 of 9 pts P11-1 (similar to) Question Help WACC. Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt funding scenario. He will borrow $5,940 from Wendy, who will charge him 4% on the loan. He will also borrow $4,304 from Bebe, who will charge him 6% on the loan, and $2,756 from Shelly, who will charge him 12% on the loan. What is the weighted average cost of capital for Eric? What is the weighted average cost of capital for Eric? % (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer. ? All parts showing Clear All Check Answer 1Homework: Chapter 11 Homework Save Score: 0 of 1 pt 4 2 of 9 (0 complete) HW Score: 0%, 0 of 9 pts P11-2 (similar to) Question Help WACC. Grey's Pharmaceuticals has a new project that will require funding of $4.3 million. The company has decided to pursue an all-debt scenario. Grey's has made agreements with four lenders for the needed financing. These lenders will advance the following amounts at the interest rates shown: Click on the Icon in order to copy its content into a spreadsheet Lender Amount Interest Rate Steven $1,600,204 15% Yang $1,327,584 13% Shepherd $972,398 11% Bailey $399,814 12% What is the weighted average cost of capital for the $4,300,000? What is the weighted average cost of capital for the $4,300,000? % (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer. ? All parts showing Clear All Check Answer 1Homework: Chapter 11 Homework Save Score: 0 of 1 pt 3 of 9 (0 complete) HW Score: 0%, 0 of 9 pts P11-8 (similar to) i Question Help Cost of preferred stock. Kyle is raising funds for his company by selling preferred stock. The preferred stock has a par value of $79 and a dividend rate of 7.2%. The stock is selling for $54.15 in the market. Kyle hires Wilson Investment Bankers to sell the preferred stock. Wilson charges a fee of 3% on the sale of preferred stock. What is the cost of preferred stock for Kyle using the investment banker? What is the cost of preferred stock for Kyle using the investment banker? % (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer. ? All parts showing Clear All Check AnswerHomework: Chapter 11 Homework Save Score: 0 of 1 pt 4 of 9 (0 complete) HW Score: 0%, 0 of 9 p P11-9 (similar to) Question Help Cost of equity: SML. Stan is expanding his business and will sell common stock for the needed funds. If the current risk-free rate is 5.1% and the expected market return is 13.7%, what is the cost of equity for Stan if the beta of the stock is a. 0.69? b. 0.87? C. 1.09? d. 1.18? a. What is the cost of equity for Stan if the beta of the stock is 0.69? |% (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer. ? 3 parts remaining Clear All Check AnswerHomework: Chapter 11 Homework Save Score: 0 of 1 pt 5 of 9 (0 complete) HW Score: 0%, 0 of 9 pt P11-11 (similar to) Question Help Book value versus market value components. Compare Trout, Inc. with Salmon Enterprises, using the balance sheet of Trout and the market data of Salmon for the weights in the weighted average cost of capital: [ ] . If the after-tax cost of debt is 10.2% for both companies and the cost of equity is 15.94%, which company has the higher WACC? What is the book value adjusted WACC for Trout, Inc.? % (Round to two decimal places.) Data Table - X Click on the Icon in order to copy its content into a spreadsheet. Trout, Inc. Current assets: $3,333,333 Current liabilities: $1,868,765 Long-term assets: $11,666,667 Long-term liabilities: $8,686,856 Total assets: $15,000,000 Owners' equity: $4,444,379 Salmon Enterprises Bonds outstanding: 3,000 selling at $1,000.67 Common stock outstanding: 260,000 selling at $34.43 Print Done Enter your answer in the answer box and then click Check Answer. ? 2 parts remaining Clear All Check AnswerHomework: Chapter 11 Homework Save Score: 0 of 1 pt 6 of 9 (0 complete) HW Score: 0%, 0 of 9 pts P11-12 (similar to) Question Help Book value versus market value components. The CFO of DMI is trying to determine the company's WACC. Brad, a promising MBA, says that the company should use book value to assign the WACC components' percentages. Angela, a long-time employee and experienced financial analyst, says that the company should use market value to assign the components' percentages. The after-tax cost of debt is at 11.3%, the cost of preferred stock is at 15.15%, and the cost of equity is at 18.55%. Calculate the WACC using both the book value and the market value approaches with the information in the popup window. . Which do you think is better? What is the book value adjusted WACC for DMI? Data Table - X 1% (Round to two decimal places.) Click on the Icon @ in order to copy its content into a spreadsheet DMI Balance Sheet ($ in thousands) Current assets $34,286 Current liabilities $0 Long-term assets $70,714 Long-term liabilities Bonds payable $66,000 Owners' equity Preferred stock $14,000 Common stock $25,000 Total liabilities and Total assets $105,000 owners' equity $105,000 Click on the Icon in order to copy its content into a spreadsheet. Market Information Debt Preferred Stock Common Stock Outstanding 66,000 140,000 1,000,000 larket PI $103.66 Enter your answer in the answer box and then click Check Answer. 5971.57 $36.25 ? 2 parts remaining Print Done Check AnswerHomework: Chapter 11 Homework Save Score: 0 of 1 pt 8 of 9 (1 complete) HW Score: 11.11%, 1 of 9p P11-16 (similar to) Question Help Apply WACC in IRR. Leeward Sailboats is reviewing the following new boat line: Click on the Icon in order to copy its content into a spreadsheet. Category To T1 T2 T3 Investment - $9, 139,226 Net working capital change - $608,000 $608,000 Operating cash flow $3,321,000 $3,872,000 54,561,000 Salvage $381,000 At what adjusted WACCs will the company accept this project? Hint. Find the IRR of the project, and use it as the maximum adjusted WACC for accepting the project. What is the IRR of the project? % (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer. ? part remaining Clear All Check AnswerHomework: Chapter 11 Homework Save Score: 0 of 1 pt 9 of 9 (1 complete) HW Score: 11.11%, 1 of 9 pt P11-21 (similar to) Question Help Beta of a project. Magellan is adding a project to the company portfolio and has the following information: the expected market return is 13.3%, the risk-free rate is 2.7%, and the expected return on the new project is 14.4%. What is the project's beta? What is the project's beta? (Round to three decimal places.) Enter your answer in the answer box and then click Check Answer. ? All parts showing Clear All Check