I NEED HELP WITH 5 and 6

Homework Problems: (1) Company BW has issued 2,000 corporate bonds with a maturity value of $1,000 and a coupon rate of 6%. Coupon payments are made every 6 months and those bonds will mature in 6 months from today. Current market price of those bonds is $978.56. Marginal corporate income tax rate is 34%, find the annual after-tax cost of debt for these bonds. [15 points] *** HINT: What have you found? Semi-annual rate or annual rate?

(2) Company BW has $500,000 loan outstanding. The annual loan interest rate is 6% with monthly compounding (meaning BW is making monthly payments). Find the annual after-tax cost of debt for the loan. [10 points] (

3) Company BW has issued 2,000 preferred stocks. The par value is $100, dividend rate is 8%, and dividend is paid at the end of each year. Market price is $85 a share. Find the annual cost of preferred stock. [10 points]

(4) Company BW has 50,000 shares outstanding and the market price is $23 per share. People believe this company is twice as risky as the stock market. Current T-bill rate is 3% and expected stock market return this year is 9%. What is BWs annual cost of equity? [15 points]

(5) Find the overall (annual) cost of capital for BW (WACC). [20 points] (6) Company BW has the following two investment opportunities (A and B). a) Which project is better, according to NPV ? [15 points] b) Which project is better, according to Modified IRR? [15 points] ***Lets not to consider the difference in the duration of these projects*** End of Year Project A Project B 0 -8,000 -6,000 1 500 2,500 2 11,500 3,500 3 3,500 4 3,000