Question
hi, for this question can you please show the formula for each one. thanks. A firm has a Capital Structure as follows: Market Value of
hi, for this question can you please show the formula for each one. thanks.
A firm has a Capital Structure as follows: Market Value of their debt Is $2,000,000, a Preferred stock is $1,000,000. There are 500,000 shares of stock outstanding, with a market value of $20 per share.
The preferred stock price is $50 and pays a $4 dividend. The common stock sells for $20 and pays a $1.00 dividend that is expected to grow by 2% per year. The bonds currently sell for $818, and the coupon rate of 5%. The bonds will mature in 10 years. The firms tax rate is 40%.
The company generates $10,000,000 is sales, expenses are $6,000,000. The initial investment of $1,000,000 is depreciated straight-line over 10 years.
What is the firms Market Capitalization?
What is the cost of the preferred stock?
What is the cost of the common stock?
What is the cost of the bonds?
What is the firms WACC?
What is the OCF____________?
Based on their Initial investment $1,000,000, what is the NPV of this 10- year project using the firms WACC that you calculated in #5 ______________?
Based on their Initial investment $1,000,000, what is the IRR of this 10- year project using the firms WACC, that you calculated in #5 ______________?
Would you invest in this project? __________.
Explain why_________________.
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