Calculate the Components of WACC and the WACC							Use 4 Decimals
Cost of Debt:
30 year Bonds
Current Price 101.5% of par value
7.5 % Coupon Rate
Semi Annual Bond
15 years to maturity
Tax Rate: 40%
After tax cost of Debt?
10 pts
Preferred Stock
Dividend		$7.50
Current Price		$57.25
What is the Cost of Preferred?
10 pts
Equity
Risk Free Rate		4.50%
Market Risk Premium		7.25%
Stock Beta		0.77
What is the Cost of Equity?
10 pts
Debt/Equity
5,000 Bonds Outstanding Selling @ 101.5% of Par Value
43,000 Preferred Stock @ $57.25
300,000 Shares of Common Stock @ $35.00 per share
What is the WACC?
20 pts
Given the WACC Calculate the NPV for the following capital budgeting decision
Investment is:		$300,000
Cash Flows
1st Year		-50,000
2nd Year		65,000
3rd Year		75,000
4th Year		85,000
5th Year		200,000
NPV is
Decision (Circle One)			Accept	Reject
40 pts
Calculate Payback
10 pts