• Calculate the firms WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock).
• Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project
• A 7.5% percent annual coupon bond with 20 years to maturity, selling for 104 percent of par. The bonds make semiannual payments. What is the before tax cost of debt? If the tax rate is 40%, what is the after-tax cost of debt?
• The firms beta is 1.2. The risk-free rate is 4.0% and the expected market return is 9%. What is the cost of equity using CAPM?
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12/31/2018 Project A Year 0 -100,000 Year 1 50,000 Year 2 30,000 Year 3 30,000 Year 4 20,000 8,719,000 Project B -250,000 100,000 100,000 50,000 50,000 -500,000 400,000 50,000 50,000 50,000 Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets 270,000 7,140,000 3,126,000 2,042,000 21,297,000 2,407,000 Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Other Assets Total Assets Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities 17,587,000 14,806,000 15,823,000 5,122,000 77,042,000 7,211,000 3,951,000 6,601,000 17,763,000 Long Term Debt Other Liabilities Total Liabilities 28,293,000 12,611,000 58,667,000 Stockholders' Equity Total Stockholder Equity 18,375,000