Cost of Debt:
30 year Bonds
Current Price 98.6% of par value
7 % Coupon Rate
Semi Annual Bond
10 years to maturity
Tax Rate: 40%
What is the Cost of Debt?						After Tax

Preferred Stock-

Dividend $6.00

Current Price $71.00

What is the Cost of Preferred?

Equity

Risk Free Rate 4.20%

Market Risk Premium 8.00%

Stock Beta 0.55

What is the Cost of Equity?

Debt/Equity

10,000 Bonds Outstanding Selling @ 98.6% of Par Value

10,000 Preferred Stock @ $71.00

150,000 Shares of Common Stock @ $65.00 per share

What is the WACC?

Given the WACC Calculate the NPV for the following capital budgeting decision

Investment is: $450,000

Cash Flows

1st Year -100,000

2nd Year 75,000

3rd Year 200,000

4th Year 300,000

5th Year 150,000

NPV is Decision (Select One) Accept or Reject

Calculate Payback