Mike inc . is considering Projects S and L, whose cash flows are shown below. These projects are mutually

exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher

MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some

conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost.

WACC: 9%

Year 0 1 2 3 4

CFS -$900 $480 $480 $480 $480

CFL -$2,000 $875 $875 $875 $875

2.

Assume that you are on the financial staff of mikes Inc., and you have collected the following data: The yield on the companys outstanding bonds is 6.8%; its tax rate is 40%; the next expected dividend is $1.40 a share; the dividend is expected to grow at a constant rate of 7.00% a year; the price of the stock is $25.00 per share; the flotation cost for selling new shares is F = 10%; and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?

3.

Based on the corporate valuation model, the value of a companys operations is $1,700 million. The companys balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $230 million in notes payable, $700 million in long-term debt, $130 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 40 million shares of stock outstanding, what is the best estimate of the stocks price per share?