Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cash flows CF0 CF1 CF2 CF3 CF4 CF5 CF6 Firm B $45,000 -$11,200 -$10,000 $44,000 -$1,200 $66,000 $32,500 Firm B capital structure consists of debts,

image text in transcribed

Cash flows CF0 CF1 CF2 CF3 CF4 CF5 CF6 Firm B $45,000 -$11,200 -$10,000 $44,000 -$1,200 $66,000 $32,500 Firm B capital structure consists of debts, common stocks, and preferred stocks. The current common stock price is $44 The financial leverage ratio is 1.2 The weight of the preferred stocks is 15% The maturity of the bond contract is 18 years The dividend payout ratio is 35% The price of the preferred stock is $32.75 The net profit margin ratio is 30% The tax rate is 30% The coupon rate which paid monthly is 12% The preferred dividend is $3.5 The current bonds price is $1.28 millions The weight of common stocks is 25% The next common dividend is $1.5 . The face value of the bonds it issued is $1million The asset turnover ratio is 20% . Given the following information presented below and the cash flows in the table above, Compute: a/ WACC (6 marks) b/NPV, ( 2marks) c/ IRR, (1 marks) . d/ Payback period (2 marks) e/ Discounted payback period (2 marks) f/ Profitability index (PI) (2 marks) Cash flows CF0 CF1 CF2 CF3 CF4 CF5 CF6 Firm B $45,000 -$11,200 -$10,000 $44,000 -$1,200 $66,000 $32,500 Firm B capital structure consists of debts, common stocks, and preferred stocks. The current common stock price is $44 The financial leverage ratio is 1.2 The weight of the preferred stocks is 15% The maturity of the bond contract is 18 years The dividend payout ratio is 35% The price of the preferred stock is $32.75 The net profit margin ratio is 30% The tax rate is 30% The coupon rate which paid monthly is 12% The preferred dividend is $3.5 The current bonds price is $1.28 millions The weight of common stocks is 25% The next common dividend is $1.5 . The face value of the bonds it issued is $1million The asset turnover ratio is 20% . Given the following information presented below and the cash flows in the table above, Compute: a/ WACC (6 marks) b/NPV, ( 2marks) c/ IRR, (1 marks) . d/ Payback period (2 marks) e/ Discounted payback period (2 marks) f/ Profitability index (PI) (2 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_step_2

Step: 3

blur-text-image_step3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

3. Why is it expensive to carry inventories?

Answered: 1 week ago