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can you show me how each cell was done by referencing the answers thanks BIU a. Av Merge & Open recovered workbooks? Your recent changes
can you show me how each cell was done by referencing the answers thanks
BIU a. Av Merge & Open recovered workbooks? Your recent changes were saved. Do you want to continue working where H3 A B DE F C H K S 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 You are working as a consultant to the Lulu Athletic Clothing Company, and you have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. You have determined the market value of the firm's current capital structure (which the firm considers to be its target mix of financing sources) as follows: Source of Capital Market Value Bonds $600,000 Preferred stock $100,000 Common stock $500,000 To finance the purchase, Lulu will sell 15-year bonds with a $1,000 par value paying 5.50 percent per year (with interest paid semiannually) at the market price of $970. Preferred stock paying a $3.25 dividend can be sold for $38. For the cost of Common stock you have decided to use CAPM. The risk-free rate is 2.0%, the market index for similar size stocks is 9.5% and the company's beta is 1.10. The firm's marginal tax rate is 27 percent. What discount rate should you use to evaluate the warehouse project? Market Value Weight Cost WC Source of Capital Bonds Preferred Stock Common Stock Cost of Debt Market Value Weight Cost WC 21 24 25 26 Source of Capital Bonds Preferred Stock Common Stock 28 Cost of Debt 30 31 Coupon Rate Years 33 34 35 Par Value PMT NPER 36 17 Price (PV) 38 39 40 YTM (Semi Annual) YTM (Annual) Tax Rate After Tax Cost of Debt 41 42 44 45 Cost of Preferred Stock 46 Market price Dividend Cost of Preferred Stock Cost of Common Equity 47 48 49 SO 51 32 53 SO 55 56 57 58 59 60 61 62 Risk-free rate Market Index rate Beta Cost of Common Equity Step by Step Solution
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