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hello kindly help me asnswer the following set of questions. Find in the attached. 1. The Heuser Company's currently outstanding bonds have a 9% coupon

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hello kindly help me asnswer the following set of questions. Find in the attached.

image text in transcribed 1. The Heuser Company's currently outstanding bonds have a 9% coupon and a 14% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is Heuser's after-tax cost of debt? Round your answer to two decimal places. ______% 2. Tunney Industries can issue perpetual preferred stock at a price of $59.50 a share. The stock would pay a constant annual dividend of $6.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. ______% 3. Percy Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 14.20%. What is Percy's cost of common equity? Round your answer to two decimal places. ______% 4. Cost of Equity with and without Flotation Javits& Sons' common stock currently trades at $34.00 a share. It is expected to pay an annual dividend of $1.75 a share at the end of the year (D1 = $1.75), and the constant growth rate is 3% a year. a. What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. _______% a. b. If the company were to issue new stock, it would incur a 17% flotation cost. What would the cost of equity from new stock be? Round your answer to two decimal places. ________ % 5. Midwest Water Works estimates that its WACC is 10.60%. The company is considering the following capital budgeting projects. Assume that each of these projects is just as risky as the firm's existing assets and that the firm may accept all the projects or only some of them. Which set of projects should be accepted? Project Size Rate of Return A $1 million 12.0% B 2 million 11.5 C 2 million 11.2 D 2 million 11.0 E 1 million 10.7 F 1 million 10.3 G 1 million 10.2 Mark for A-G whether to accept or do not accept 6. Cost of Common Equity The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 5% per year. Carpetto's common stock currently sells for $24.50 per share; its last dividend was $2.40; and it will pay a $2.52 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Round your answer to two decimal places. _____% b. If the firm's beta is 0.70, the risk-free rate is 7%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. ________% c. If the firm's bonds earn a return of 9%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 105 in your calculations. Round your answer to two decimal places. ______ % d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpetto's cost of common equity? Round your answer to two decimal places. ________ % 7. Cost of Common Equity with and without Flotation The Evanec Company's next expected dividend, D1, is $2.53; its growth rate is 5%; and its common stock now sells for $33. New stock (external equity) can be sold to net $29.70 per share. a. A)What is Evanec's cost of retained earnings, rs? Round your answer to two decimal places. rs = b. % B)What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F= % C) What is Evanec's cost of new common stock, re? Round your answer to two decimal places. re = % 8. Cost of Common Equity and WACC Patton Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 8% and its marginal tax rate is 40%. The current stock price is P0 = $31.00. The last dividend was D0 = $2.25, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC? Round your answers to two decimal places. A)rs = % B)WACC = % 9. WACC The Patrick Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 11%, and its marginal tax rate is 40%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,116. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Calculate Patrick's WACC using market value weights. Round your answer to two decimal places. Assets Liabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt Inventories 360 Long-term debt $1,070 2,160 Common equity 1,754 Plant and equipment, net Total assets $2,880 Total liabilities and equity $2,880 _______% 10. Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $4 million of retained earnings with a cost of r s = 12%. New common stock in an amount up to $10 million would have a cost of r e = 14%. Furthermore, Klose can raise up to $3 million of debt at an interest rate of r d = 10%, and an additional $6 million of debt at rd = 13%. The CFO estimates that a proposed expansion would require an investment of $7.1 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places. ______% 11. Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 10%, and its common stock currently pays a $3.25 dividend per share (D 0 = $3.25). The stock's price is currently $22.75, its dividend is expected to grow at a constant rate of 5% per year, its tax rate is 40%, and its WACC is 15.45%. What percentage of the company's capital structure consists of debt? Round your answer to two decimal places. _______ % 12. WACC Midwest Electric Company (MEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 10% as long as it finances at its target capital structure, which calls for 45% debt and 55% common equity. Its last dividend (D 0) was $2.70, its expected constant growth rate is 4%, and its common stock sells for $22. MEC's tax rate is 40%. Two projects are available: Project A has a rate of return of 13%, while Project B's return is 10%. These two projects are equally risky and about as risky as the firm's existing assets. What is its cost of common equity? Round your answer to two decimal places. ________ % What is the WACC? Round your answer to two decimal places. _______% Which projects should Midwest accept? Project a or project b 13.Ballack Co.'s common stock currently sells for $46.00 per share. The growth rate is a constant 9%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 25%, and the expected return on equity (ROE) is 12%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. __________% 14. Trivoli Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $101.50; but flotation costs will be 8% of the market price, so the net price will be $93.38 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places. _______% 15. WACC and Cost of Common Equity Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $8 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 15%, a before-tax cost of debt of 8%, and a tax rate of 40%. The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D 1) is $2 and the current stock price is $22. A)What is the company's expected growth rate? Round your answer to two decimal places at the end of the calculations. _____% B)If the firm's net income is expected to be $1.9 billion, what portion of its net income is the firm expected to pay out as dividends? (Hint: Refer to Equation below.) Growth rate = (1 - Payout ratio)ROE Round your answer to two decimal places at the end of the calculations. _______% 16. Cost of Common Equity The Bouchard Company's EPS was $6.50 in 2014, up from $4.42 in 2009. The company pays out 60% of its earnings as dividends, and its common stock sells for $37. A)Calculate the past growth rate in earnings. (Hint: This is a 5-year growth period.) Round your answer to two decimal places. ___________% B)The last dividend was D0 = 0.60($6.50) = $3.90. Calculate the next expected dividend, D1, assuming that the past growth rate continues. Round your answer to the nearest cent. $ __________ C)What is Bouchard's cost of retained earnings, rs? Round your answer to two decimal places. _________% 17) Calculation of g and EPS Sidman Products' common stock currently sells for $51 a share. The firm is expected to earn $5.10 per share this year and to pay a year-end dividend of $3.70, and it finances only with common equity. A)If investors require a 10% return, what is the expected growth rate? Round your answer to two decimal places. _______ % B)IfSidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS? (Hint: g = (1 - Payout rate)(ROE).) Round your answer to the nearest cent. $ per share

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