Can anyone please help me with this assignment??? Please let me know =)

Instructions NAME: To complete the homework assignments in the templates provided: 1. The question is provided for each problem. You may need to refer to your textbook f information in a few cases. 2. You will enter the required information into the shaded cells. 3. The cells are coded: a) T requires a text answer. Essay questions require references; use the textbook. b) C requires a calculation, using Excel formulas or functions. You cannot perform th calculator and then type the answer in the cell. You will enter the calculation in the c final answer will show in the cell. I will be able to review your calculation and correct c) F requires a number only. In some problems, a \"Step 1\" is added to help you solve d) Formula requires a written formula, not the numbers. For example, the rate of retu nominal)/ (1+inflation)]-1, or D (debt) + E (equity) = V (value). 4. Name your assignment file as "lastnamefirstinitial-FINC600-Week#", and submit by 7. ions efer to your textbook for additional es; use the textbook. You cannot perform the operation on a he calculation in the cell, and only the calculation and correct, if necessary. added to help you solve the problem. xample, the rate of return = [(1 + Week#", and submit by midnight ET, Day Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 14-2 Assume that MM's theory holds with taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 40% corporate tax rate. a. How much of the firm's value is accounted for by the debt-generated tax shield? b. How much better off will UF's a shareholder be if the firm borrows $20 more and uses it to repurchase stock? Answer: Step 1: Tax rate - Tc a. Permanent Debt - D b. Additional Debt - D F F F Step 2: Formula (in words) Calculation a. Tax shield T C b. Tax shield T Benefit to Shareholders C C Principles of Corporate Finance, Concise, 2nd Edition TIP: difference between a and b Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. xpected to be it to repurchase ifference between a and b Principles of Corporate Finance, Concise, 2nd Edition Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 14-24 Some companies' debt-equity targets are expressed not as a debt ratio, but as a target debt rating on a firm's outstanding bonds. What are the pros and cons of setting a target rating, rather than a target ratio? Answer: Pros T Cons T Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 15-6 A project costs $1 million and has a base-case NPV of exactly zero (NPV = 0). What is the project's APV in the following cases? a. If the firm invests, it has to raise $500,000 by a stock issue. Issue costs are 15% of net proceeds. b. If the firm invests, its debt capacity increases by $500,000. The present value of interest tax shields on this debt is $76,000. Answers: a. APV stock issue T Formula (in words) Calculation C b. APV debt increases T C Principles of Corporate Finance, Concise, 2nd Edition Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. hat is the project's APV in the % of net proceeds. of interest tax shields on this debt TIP: p.394 TIP: p.393 Principles of Corporate Finance, Concise, 2nd Edition Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 15-9 The WACC formula seems to imply that debt is "cheaper" than equity--that is, that a firm with more debt could use a lower discount rate. Does this make sense? Explain briefly. Answer: T Instructions NAME: To complete the homework assignments in the templates provided: 1. The question is provided for each problem. You may need to refer to your textbook for additional information in a few cases. 2. You will enter the required information into the shaded cells. 3. The cells are coded: a) T requires a text answer. Essay questions require references; use the textbook. b) C requires a calculation, using Excel formulas or functions. You cannot perform the operation on a calculator and then type the answer in the cell. You will enter the calculation in the cell, and only the final answer will show in the cell. I will be able to review your calculation and correct, if necessary. c) F requires a number only. In some problems, a \"Step 1\" is added to help you solve the problem. d) Formula requires a written formula, not the numbers. For example, the rate of return = [(1 + nominal)/ (1+inflation)]-1, or D (debt) + E (equity) = V (value). 4. Name your assignment file as "lastnamefirstinitial-FINC600-Week#", and submit by midnight ET, Day 7. Problem 14-2 Assume that MM's theory holds with taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 40% corporate tax rate. a. How much of the firm's value is accounted for by the debt-generated tax shield? b. How much better off will UF's a shareholder be if the firm borrows $20 more and uses it to repurchase stock? Answer: Step 1: Tax rate - Tc a. Permanent Debt - D b. Additional Debt - D 40% $40.00 $20.00 Step 2: a. Tax shield b. Tax shield Formula (in words) =Permanent debt x tax rate =(Permanent debt+Additional debt) x Benefit to Shareholders Calculation $16.00 $24.00 $8.00 TIP: difference between a and b Problem 14-24 Some companies' debt-equity targets are expressed not as a debt ratio, but as a target debt rating on a firm's outstanding bonds. What are the pros and cons of setting a target rating, rather than a target ratio? Answer: Pros: It provides valuable information that can be used in cases such as if the company stray from it set target, the company can adjust its operation to regain its initial target rating. Secondly, a higher target rating is able to issue a particular set of commercial papers that is exempted from SEC registration. Thirdly, a company with a higher target rating is exempted from registration under the Uniform Securities Act. Fourthly, a higher rating can translate to millions of dollars in savings in interest payments and registration. Fifthly, the public has unrestricted access to these ratings which they may use to make decisions in terms of savings, borrowing and investments (Brealey et al., 2010). Cons: Firstly, if a target rating has been set too high than the usual debt -equity ratio might be considered conservative and a target rating that has been set lower than the debt-equity ratio is considered too aggressive. Secondly, the loans provided under these structures are only made to marginally qualified debtors and often guaranteed with insufficient collateral. This should be a reason to make the corporation loose rating, but it acts contrarily (Brealey et al., 2010). Thirdly, a poor rating against a company may lead to the significant deterioration of the issuer. Fourthly, most rating companies are paid by the subject companies to give the ratings. As such a rating may not necessarily reflect the actual debt-equity ratio of a company since the rating company may be afraid to lose business if they give them a lower rating. This may then mislead investors into venturing into unsteady markets (Brealey et al., 2010). Problem 15-6 A project costs $1 million and has a base-case NPV of exactly zero (NPV = 0). What is the project's APV in the following cases? a. If the firm invests, it has to raise $500,000 by a stock issue. Issue costs are 15% of net proceeds. b. If the firm invests, its debt capacity increases by $500,000. The present value of interest tax shields on this debt is $76,000. Answers: a. APV stock issue Formula (in words) =base-caseNPV+PV of financing effect b. APV debt increases =base-case NPV+PV of financing effect+interest tax shield Calculation 1425000 TIP: p.394 576000 TIP: p.393 Problem 15-9 The WACC formula seems to imply that debt is "cheaper" than equity--that is, that a firm with more debt could use a lower discount rate. Does this make sense? Explain briefly. Answer: Capital structure signifies the relative percentage of the diverse sources of funds of a corporation. This comprises debt, equity and hybrid implements such as convertible bonds. As cost of equity is not obviously presented in income statement and cost of debt is enumerated in the income statement, it is easy to overlook that debt is a comparative cheaper source of capital than equity. The following reasons explain why Debt is cheaper than equity; First, debtors have a preceding claim if the corporation goes into liquidation or become insolvent and consequently, warrants investors a lesser rate of return for the corporation. Second, Interest paid is tax deductible and consequently generates a lesser tax bill, thereby efficiently creating cash for the corporation (Brealey et al., 2010). Weighted average cost of capital is responsible for telling us the return that both equity stakeholders - equity owners and lenders - can anticipate from the corporation. It is the opportunity cost of assuming the risk of putting money into the corporation