I have additional questions I would like the exact answers and I need the answers before 5:pm on 8/15/16. The questions are in the attached word document and pasted below.

Problem 14-2

Bayani Bakery's most recent FCF was $48 million; the FCF is expected to grow at a constant rate of 6%. The firm's WACC is 13% and it has 15 million shares of common stock outstanding. The firm has $30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other nonoperating assets. It has $370 million in debt and $56 million in preferred stock.

1. What is the value of operations? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million

1. Immediately prior to the repurchase, what is the intrinsic value of equity? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million

1. Immediately prior to the repurchase, what is the intrinsic stock price? Round your answer to the nearest cent. $ per share

1. How many shares will be repurchased? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. million shares How many shares will remain after the repurchase? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. million shares

1. Immediately after the repurchase, what is the intrinsic value of equity? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million The intrinsic stock price? Round your answer to two decimal places. $ per share

Problem 15-9

Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $12.85 million, and its tax rate is 25%. Pettit can change its capital structure either by increasing its debt to 65% (based on market values) or decreasing it to 35%. If it decides to increase its use of leverage, it must call its old bonds and issue new ones with a 12% coupon. If it decides to decrease its leverage, it will call in its old bonds and replace them with new 7% coupon bonds. The company will sell or repurchase stock at the new equilibrium price to complete the capital structure change.

The firm pays out all earnings as dividends; hence, its stock is a zero growth stock. Its current cost of equity, r_s, is 14%. If it increases leverage, r_s will be 16%. If it decreases leverage, r_s will be 13%.

Present situation (50% debt): What is the firm's WACC? Round your answer to three decimal places. % What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. $ million

65% debt: What is the firm's WACC? Round your answer to two decimal places. ? % What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. $ million

35% debt: What is the firm's WACC? Round your answer to two decimal places. ? % What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. $ million

Problem 15-11 WACC and Optimal Capital Structure

F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows:

Market Debt- to-Value Ratio (wd)	Market Equity-to-Value Ratio (ws)	Market Debt- to-Equity Ratio (D/S)	Before-Tax Cost of Debt (rd)
0.0	1.0	0.00	7.0%
0.2	0.8	0.25	8.0
0.4	0.6	0.67	10.0
0.6	0.4	1.50	12.0
0.8	0.2	4.00	15.0

F. Pierce uses the CAPM to estimate its cost of common equity, r_s. The company estimates that the risk-free rate is 6%, the market risk premium is 6%, and the company's tax rate is 40%. F. Pierce estimates that its beta now (which is "unlevered" since it currently has no debt) is 0.9. Based on this information, what is the firm's optimal capital structure, and what would the weighted average cost of capital be at the optimal capital structure? Do not round intermediate calculations. Round your answers to two decimal places.

DEBT	%
EQUITY	%
WACC	%

Problem 15-12

Equity Viewed as an Option

A. Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is located near Knoxville, Tennessee. Fethe's current value of operations, which is also its value of debt plus equity, is estimated to be $7 million. Fethe has $3 million face value, zero coupon debt that is due in 2 years. The risk-free rate is 5%, and the standard deviation of returns for companies similar to Fethe is 40%. Fethe's owners view their equity investment as an option and they would like to know the value of their investment.

1. Using the Black-Scholes option pricing model, how much is Fethe's equity worth? In your calculations round normal distribution values to 4 decimal places. Round your answer to two decimal places.

$ million

1. How much is the debt worth today? What is its yield? Round your answer for the debt worth to two decimal places. Round your answer for the yield on the debt to one decimal place.

Debt worth today: $ million Yield on the debt: %

1. How would the equity value and the yield on the debt change if Fethe's managers could use risk management techniques to reduce its volatility to 25%? In your calculations round normal distribution values to 4 decimal places. Round your answer for the equity worth to two decimal places. Round your answer for the yield on the debt to one decimal place.

New equity worth: $ million New yield on the debt: % Can you explain this? The value of the stock goes down and the value of the debt goes up because with lower risk, Fethe has

of a chance of a "home run".

Problem 14-2 Bayani Bakery's most recent FCF was $48 million; the FCF is expected to grow at a constant rate of 6%. The firm's WACC is 13% and it has 15 million shares of common stock outstanding. The firm has $30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other nonoperating assets. It has $370 million in debt and $56 million in preferred stock. a. What is the value of operations? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million b. Immediately prior to the repurchase, what is the intrinsic value of equity? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million c. Immediately prior to the repurchase, what is the intrinsic stock price? Round your answer to the nearest cent. $ per share d. How many shares will be repurchased? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. million shares How many shares will remain after the repurchase? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. million shares e. Immediately after the repurchase, what is the intrinsic value of equity? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ million The intrinsic stock price? Round your answer to two decimal places. $ per share Problem 15-9 Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $12.85 million, and its tax rate is 25%. Pettit can change its capital structure either by increasing its debt to 65% (based on market values) or decreasing it to 35%. If it decides to increase its use of leverage, it must call its old bonds and issue new ones with a 12% coupon. If it decides to decrease its leverage, it will call in its old bonds and replace them with new 7% coupon bonds. The company will sell or repurchase stock at the new equilibrium price to complete the capital structure change. The firm pays out all earnings as dividends; hence, its stock is a zero growth stock. Its current cost of equity, rs, is 14%. If it increases leverage, rs will be 16%. If it decreases leverage, rs will be 13%. Present situation (50% debt): What is the firm's WACC? Round your answer to three decimal places. % What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. $ million 65% debt: What is the firm's WACC? Round your answer to two decimal places. % What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. $ million 35% debt: What is the firm's WACC? Round your answer to two decimal places. % What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. $ million Problem 15-11 WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: Market Market Market DebtDebtEquity-toto-Equity to-Value Value Ratio Ratio (wd) Ratio (ws) (D/S) BeforeTax Cost of Debt (rd) 0.0 1.0 0.00 7.0% 0.2 0.8 0.25 8.0 0.4 0.6 0.67 10.0 0.6 0.4 1.50 12.0 0.8 0.2 4.00 15.0 F. Pierce uses the CAPM to estimate its cost of common equity, rs. The company estimates that the risk-free rate is 6%, the market risk premium is 6%, and the company's tax rate is 40%. F. Pierce estimates that its beta now (which is "unlevered" since it currently has no debt) is 0.9. Based on this information, what is the firm's optimal capital structure, and what would the weighted average cost of capital be at the optimal capital structure? Do not round intermediate calculations. Round your answers to two decimal places. % DEBT % EQUITY % WACC Problem 15-12 Equity Viewed as an Option A. Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is located near Knoxville, Tennessee. Fethe's current value of operations, which is also its value of debt plus equity, is estimated to be $7 million. Fethe has $3 million face value, zero coupon debt that is due in 2 years. The risk-free rate is 5%, and the standard deviation of returns for companies similar to Fethe is 40%. Fethe's owners view their equity investment as an option and they would like to know the value of their investment. a. Using the Black-Scholes option pricing model, how much is Fethe's equity worth? In your calculations round normal distribution values to 4 decimal places. Round your answer to two decimal places. $ million b. How much is the debt worth today? What is its yield? Round your answer for the debt worth to two decimal places. Round your answer for the yield on the debt to one decimal place. Debt worth today: $ Yield on the debt: million % c. How would the equity value and the yield on the debt change if Fethe's managers could use risk management techniques to reduce its volatility to 25%? In your calculations round normal distribution values to 4 decimal places. Round your answer for the equity worth to two decimal places. Round your answer for the yield on the debt to one decimal place. New equity worth: $ New yield on the debt: million % Can you explain this? The value of the stock goes down and the value of the debt goes up because with lower risk, Fethe has of a chance of a "home run"