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Hey I have some important study questions to post that is due tomorrow. I will submit another assignment tomorrow 1). EZCUBE Corp. is 54% financed
Hey I have some important study questions to post that is due tomorrow. I will submit another assignment tomorrow
1). EZCUBE Corp. is 54% financed with long-term bonds and 46% with common equity. The debt securities have a beta of 0.19. The company's equity beta is 1.21. What is EZCUBE's asset beta? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Beta of assets 2). A project has a forecasted cash flow of $118 in year 1 and $129 in year 2. The interest rate is 5%, the estimated risk premium on the market is 12%, and the project has a beta of 0.58. If you use a constant risk-adjusted discount rate, what is a. The PV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ b. The certainty-equivalent cash flow in year 1 and year 2? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Cash Flow Year 1 Year 2 $ $ c. The ratio of the certainty-equivalent cash flows to the expected cash flows in years 1 and 2? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Ratio Year 1 Year 2 3). Following information for Golden Fleece Financial: 440,00 0 6% 17,000 $ 50.4 $ 39 13 % Long-term debt outstanding: $ Current yield to maturity (rdebt): Number of shares of common stock: Price per share: Book value per share: Expected rate of return on stock (requity): Calculate Golden Fleece's company cost of capital. Ignore taxes. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Cost of capital % 4). A company is 40% financed by risk-free debt. The interest rate is 10%, the expected market risk premium is 8%, and the beta of the company's common stock is .5. a. What is the company cost of capital? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Cost of capital % b. What is the after-tax WACC, assuming that the company pays tax at a 35% rate? (Do not round intermediate calculations.) After-tax WACC referencesebook % & resources 5). EZCUBE Corp. is 50% financed with long-term bonds and 50% with common equity. The debt securities have a beta of .15. The company's equity beta is 1.25. What is EZCUBE's asset beta? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Beta of assets 6). A project has a forecasted cash flow of $110 in year 1 and $121 in year 2. The interest rate is 5%, the estimated risk premium on the market is 10%, and the project has a beta of .5. If you use a constant riskadjusted discount rate, what is a. The PV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ b. The certainty-equivalent cash flow in year 1 and year 2? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Cash Flow Year 1 Year 2 $ $ c. The ratio of the certainty-equivalent cash flows to the expected cash flows in years 1 and 2? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Ratio Year 1 Year 2 7). A project has the following forecasted cash flows: C0 100 Cash Flows, ($ thousands) C1 C2 +40 +60 C3 +50 The estimated project beta is 1.5. The market return rm is 16%, and the risk-free rate rf is 7%. a. Estimate the opportunity cost of capital and the project's NPV (using the same rate to discount each cash flow). (Do not round intermediate calculations. Enter your answers in thousands. Round your answers to 2 decimal places.) Cost of capital NPV % $ b. What are the certainty-equivalent cash flows in each year? (Do not round intermediate calculations. Enter your answers in thousands. Round your answers to 2 decimal places.) Certainty-Equivalent Cash Flow $ $ $ Year 1 2 3 c. What is the ratio of the certainty-equivalent cash flow to the expected cash flow in each year? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Year 1 2 3 Ratio 8). Using a company's cost of capital to evaluate a project is: I) always correct; II) always incorrect; III) correct for projects that have average risk compared to the firm's other assets I only II only III only I and III only 9). The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate of return on the equity is 20% and that on its debt is 8%, calculate the company's cost of capital. (Assume no taxes.) 20% 17% 14% 11% 10). One calculates the after-tax weighted average cost of capital (WACC) using which of the following formulas: WACC = (rD) (D/V) + (rE) (E/V), where: V = D + E. WACC = (rD) (1 - TC) (D/V) + (rE) (1 - TC) (E/V), where: V = D + E. WACC = (rD) (D/E) + (rE) (E/D). WACC = (rD) (1 - TC) (D/V) + (rE) (E/V), where: V = D + E. 11). To calculate the total value of the firm (V), one should rely on the: market values of debt and equity. market value of debt and the book value of equity. book values of debt and the market value of equity. book values of debt and equity. 12). Given are the following data for Vinyard Corporation: Calculate the proportions of debt (D/V) and equity (E/V) that you would use for estimating Vinyard's weighted average cost of capital (WACC): 40% debt and 60% equity. 50% debt and 50% equity. 25% debt and 75% equity. 75% debt and 25% equity. 13). A firm has a total market value of $10 million while its debt has a market value of $4 million. What is the aftertax weighted average cost of capital if the before-tax cost of debt is 10%, the cost of equity is 15%, and the tax rate is 35%? 13.0% 11.6% 8.8% 10.4% 14). Project M requires an initial investment of $25 million. The project is expected to generate $2.25 million in aftertax cash flow each year forever. If the weighted average cost of capital (WACC) is 9%, calculate the NPV of the project. -2.5 million +2.5 million zero +2.1 million 15). Consider the following data for Kriya Company: A constant growth rate of 4% is sustained forever after year 3. The weighted average cost of capital is 10%. Calculate the present value of the horizon value. (Assume that the horizon value includes the 6.24M FCF in year 4.) $90.4 million $104 million $78.1 million $75.1 millionStep by Step Solution
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