Hi,

This is a short HW assignement that needs to be done in excel. If you are good at finance this should take 30 minutes.

Please do your assignments in Excel. Show ALL your calculations in Excel. Cleary show the final answer of a problem by color-coding the cell (only light color).

Ch. 7, Problems: 7-1, 7-2, 7-3, 7-4, 7-6, and 7-10.

(7-1 DPS Calculation) Thress Industries just paid a dividend of $1.50 a share (i.e., D 0 = $1.50). The dividend is expected to grow 5% a year for the next 3 years and then 10% a year thereafter. What is the expected dividend per share for each of the next 5 years?

(7-2 Constant Growth Valuation) Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year(i.e., D 1 = $1.50). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, r s , is 13%. What is the estimated value per share of Boehm s stock?

(7-3 Constant Growth Valuation) Woidtke Manufacturing s stock currently sells for $22 a share. The stock just paid a dividend of $1.20 a share (i.e., D 0 = $1.20), and the dividend is expected to grow forever ata constant rate of 10% a year. What stock price is expected 1 year from now? What is the estimated required rate of return on Woidtke s stock (assume the market is in equilibrium with the required return equal to the expected return)?

(7-4 Preferred Stock Valuation) Nick s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5at the end of each year. The preferred sells for $50 a share. What is the stock s required rate of return (assume the market is in equilibrium with the required return equal to the expected return)?

(7-6 Value of Operations of Constant Growth Firm) EMC Corporation has never paid a dividend. Its current free cash flow of $400,000 is expected to grow at a constant rate of 5%. The weighted average cost of capital is WACC = 12%. Calculate EMC s estimated value of operations.

(7-10 Preferred stock rate of return) What is the required rate of return on a preferred stock with a $50 par value, a stated annual dividend of 7% of par, and a current market price of (a) $30, (b) $40, (c) $50, and(d) $70 (assume the market is in equilibrium with the required return equal to the expected return)?

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Ch. 9, Problems: 9-2, 9-5, and 9-15.

(9-2 After Tax Cost of Debt) LL Incorporated s currently outstanding 11% coupon bonds have a yield to maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL s after-tax cost of debt?

(9-5 Cost of Equity : DCF) Summerdahl Resort s common stock is currently trading at $36 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D 1 = $3.00), and the dividend is expected to grow at a constant rate of 5% a year. What is its cost of common equity?

(9-15) On January 1, the total market value of the Tysseland Company was $60 million. During the year, the company plans to raise and invest $30 million in new projects. The firms present market value capital structure, shown below, is considered to be optimal. There is no short-term debt.

Debt $30,000,000

Common equity 30,000,000

Total capital $60,000,000

New bonds will have an 8% coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders required rate of return is estimated to be12%, consisting of a dividend yield of 4% and an expected constant growth rate of 8%.(The next expected dividend is $1.20, so the dividend yield is $1.20/$30 = 4%.) The marginal tax rate is 40%.

a. In order to maintain the present capital structure, how much of the new investment must be financed by common equity?

b. Assuming there is sufficient cash flow for Tysseland to maintain its target capital structure without issuing additional shares of equity, what is its WACC?

c. Suppose now that there is not enough internal cash flow and the firm must issue new shares of stock. Qualitatively speaking, what will happen to the WACC? No numbers are required to answer this question.

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Ch. 10, Problems: 10-1, 10-2, 10-3, 10-4, and 10-5.

(10-1 NPV) A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7years, and a cost of capital of 11%. What is the projects NPV? ( Hint: Begin by constructing a time line.)

(10-2 IRR) Refer to Problem 10-1. What is the projects IRR?

(10-3 MIRR) Refer to Problem 10-1. What is the projects MIRR?

(10-4 Profitability Index) Refer to Problem 10-1. What is the projects PI?

(10-5 Payback) Refer to Problem 10-1. What is the projects payback period?