Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ita for questions # 27 - 31 Project A Initial Year 1 Year 2 Year 3 Year 4 Years Net Cost of New Expenditure Additional

image text in transcribed
image text in transcribed
image text in transcribed
Ita for questions # 27 - 31 Project A Initial Year 1 Year 2 Year 3 Year 4 Years Net Cost of New Expenditure Additional Revenue $(1,200,000) Additional Operating Costs $287.500 $375,000 $562,500 $593,750 $725.000 80,500 Depreciation 105,000 129.500 166,250 203.000 400,000 Net increase in income 350.000 250.000 100,000 100.000 -193,000 -80,000 83,000 327,500 Less: Tax at 35% 422,000 67.550 28,000 -29050 -114.625-147.700 Increase in after-tax income -$125,400 $52,000 $53,950 $212,875 $274,600 27-A (5 points) What ie Nu.. 29. (15 points) Calculate the Net Present Value (NPV) AND Internal Rate of Return (IRR) for Project A. Use the WACC THAT YOU CORRECTLY CALCULATED FROM QUESTION 26 ABOVE for your calculations. Show your work, AND BECAREFUL THAT YOU CORRECTLY ANSWERED #26. NPV CALCULATION - Project A IRR 26. 20 points. Given the following information, calculate the weighted Average Cost of Capital (WACC). Line up the calculations as shown in the template SHOW YOUR WORK and BE CAREFUL BECAUSE YOU WILL NEED TO USE THIS ANSWER FOR QUESTIONS 37. Capital structure Financing Sources: Debt: Preferred Stock Common Stock Retained Earnings $1.420.000 SI 50.000 $1.300,000 S1,150,000 Additional Information: Bond coupon rate/Current Yield to Maturity Last year's Dividend - Commons Dividend, Preferred Current Price, common Current Price, preferred Most Recent Market Return Overall Flotation Cost preferred share Growth rate of common dividends Most Recently Published Risk Free Rate Corporate tax rate Beta: 8.6% $1.60 $3.50 $36.00 553.00 7% $8.00 5.096 2.5% 35% 1.7 Use the Dividend Growth Model to calculate the Cost of Common Equity. Use the Capital Asset Pricing Model to calculate the cost of Retained Earnings. Cost % After-Tax Cost % Weight Weighted Cost % Debt Preferred Common Retained Earnings Total WACC 7

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Negative Interest Rates And Financial Stability Lessons In Systemic Risk

Authors: Karol Rogowicz, Malgorzata Iwanicz Drozdowska

1st Edition

1032319496, 1000787826, 9781032319490, 9781000787825

More Books

Students also viewed these Finance questions