Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hi. can you help with the calculations on tabs 9-2 and 10-4? I have the narrative part completed. just need help with calculations. Instructions NAME:
Hi. can you help with the calculations on tabs 9-2 and 10-4? I have the narrative part completed. just need help with calculations.
Instructions NAME: To complete the homework assignments in the templates provided: 1. The question is provided for each problem. You may need to refer to your textbook f information in a few cases. 2. You will enter the required information into the shaded cells. 3. The cells are coded: a) T requires a text answer. Essay questions require references; use the textbook. b) C requires a calculation, using Excel formulas or functions. You cannot perform th calculator and then type the answer in the cell. You will enter the calculation in the c final answer will show in the cell. I will be able to review your calculation and correct c) F requires a number only. In some problems, a \"Step 1\" is added to help you solve d) Formula requires a written formula, not the numbers. For example, the rate of retu nominal)/ (1+inflation)]-1, or D (debt) + E (equity) = V (value). 4. Name your assignment file as "lastnamefirstinitial-FINC600-Week#", and submit by 7. ions efer to your textbook for additional es; use the textbook. You cannot perform the operation on a he calculation in the cell, and only the calculation and correct, if necessary. added to help you solve the problem. xample, the rate of return = [(1 + Week#", and submit by midnight ET, Day Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 9-2 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. Risk Free Debt Interest Rate Market Risk Premium Beta Taxes 40% 10% 8% 0.5 35% a. b. What is the company cost of capital? What is the after-tax WACC, assuming that the company pays tax at a 35% rate? Answers: Step 1: r(d)= r(e)= D/V E/V F C C C TIP: D + E = V Step 2: a. b. Formula (in words) Cost of Capital T Calculation C WACC T C Principles of Corporate Finance, Concise, 2nd Edition Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 9-16 What types of firms need to estimate industry asset betas? How would such a firm make the estimate? Describe the process step by step. Answer: What types of firms need to estimate industry asset betas? T How would such a firm make the estimate? Describe the process step by step. T Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. e estimate? Describe Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 10-2 Explain how each of the following actions or problems can distort or disrupt the capital budgeting process. a. Overoptimism by project sponsors. b. Inconsistent forecasts of industry and macroeconomic variables. c. Capital budgeting organized solely as a bottom-up process. Answer: a. T b. T c. T Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. eting process. a. Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. Problem 10-14 Suppose that the expected variable costs of Otobai's project are 33 billion a year and that fixed costs are zero. a. How does this change the degree of operating leverage (DOL)? b. Now recompute the operating leverage assuming that the entire 33 billion of costs are fixed. Answers: See page 243, Table 10.1, of textbook for additional information. Copy is also provided below. a. DOL Formula 1+(Fixed cost + depreciation)/ operating profit F Fixed Costs C b. 1+(Fixed cost + depreciation)/ operating profit F C Principles of Corporate Finance, Concise, 2nd Edition Calculation Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer. r and that fixed costs are zero. a. How does this b. Now e fixed. lso provided below. Principles of Corporate Finance, Concise, 2nd EditionStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started