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I need help with these finance question. Please see attachment below You are given the following information about a company. Their tax rate is 34%.

I need help with these finance question. Please see attachment below

image text in transcribed You are given the following information about a company. Their tax rate is 34%. The firm is in need of $5 m external funds. Your bond advisor suggests that new bond issues can be lower than the current yield to ma 2.0% . You are not sure he is correct. Should you issue the new debt to raise money? Existing capital structure: Debt: 5,000 Eight percent (8%) coupon bonds outstanding. The par value is $1000 and they mature in t Equity: 50,000 shares outstanding. The common stock is currently selling for $72 per share. The beta f Preferred Stock: 10,000 shares of 2% preferred stock with a par value of $100, and is currently selling f Market Information: The risk of the market is 6% and the risk-free rate is 2%. The industry debt-equity The flotation rate for new debt is 3% and for new equity it is 5%. 1 Calculate the existing weighted average cost of capital. 2 New cost of capital if add 5M in new bonds This assumes we sell enough bonds to realize 5M. Since the price will be net of flotation we need to sel 3 What if they finance the 5M with all equity? What would the capital structure and WACC look like? 4 What if they add 5M in financing split among debt and equity in proportions equal to the current capita . The firm is in need of $5 million dollars in than the current yield to maturity by money? $1000 and they mature in ten years. They are currently selling for $1250 and make semiannual payments. r $72 per share. The beta for the company is 1.15. 0, and is currently selling for $65 per share. %. The industry debt-equity ratio is 33%. of flotation we need to sell them at 1000 but net a bit less. e and WACC look like? equal to the current capital structure. What is the WACC? l payments

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