>>> MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotId=3112440& CENGAGE | MINDTAP HW6 - Capital Budgeting Back to Assignment Attempts Keep the Highest / 10 1. Problem 11-03 (Cost of Preferred Stock) eBook Q Search this course Cost of Preferred Stock A-Z Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $75 a share with an annual dividend of $5.00 a share. Ignoring flotation costs, what is the company's cost of preferred stock, rps? Round your answer to two decimal places. Office % 17C Cloudy Grade it Now Save & Continue Continue without saving Q A+ 6:57 PM 10/26/2022 >>> MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotId=3112440& CENGAGE | MINDTAP HW6 - Capital Budgeting Back to Assignment Attempts Keep the Highest / 10 2. Problem 11-05 (Cost of Equity: Dividend Growth) Q Search this course eBook Problem Walk-Through Cost of Equity: Dividend Growth A-Z Summerdahl Resort's common stock is currently trading at $39 a share. The stock is expected to pay a dividend of $2.75 a share at the end of the year (D = $2.75), and the dividend is expected to grow at a constant rate of 4% a year. What is the cost of common equity? Round your answer to two decimal places. Office % 17C Cloudy Grade it Now Save & Continue Continue without saving Q A+ 6:57 PM 10/26/2022 MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotId=3112440& >>> CENGAGE | MINDTAP HW6 - Capital Budgeting Back to Assignment Attempts Keep the Highest / 10 3. Problem 11-06 (Cost of Equity: CAPM) eBook Cost of Equity: CAPM Problem Walk-Through Q Search this course Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 3% and the yield on a 10-year T-bond is 7%. The market risk premium is 7%, and the return on an average stock in the market last year was 13%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places. 17C Cloudy % Grade it Now Save & Continue Continue without saving Q A-Z Office 6:57 PM 10/26/2022 A+ MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotId=3112440& >>> CENGAGE | MINDTAP HW6 - Capital Budgeting Back to Assignment Attempts 4. Problem 11-07 (WACC) WACC eBook Keep the Highest / 10 Problem Walk-Through Q Search this course Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 7%, rps = 8.6%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places. 16C Mostly cloudy % Grade it Now Save & Continue Continue without saving Q A-Z Office 6:57 PM 10/26/2022 A+ >>> MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotId=3112440& CENGAGE | MINDTAP HW6 - Capital Budgeting Back to Assignment Attempts Keep the Highest / 10 5. Problem 11-09 (Bond Yield and After-Tax Cost of Debt) M eBook Q Search this course Bond Yield and After-Tax Cost of Debt A-Z A company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at a price of $745.33. The company's federal-plus-state tax rate is 40%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places. Office % 16C Mostly cloudy Grade it Now Save & Continue Continue without saving Q A+ 6:57 PM 10/26/2022 >>> MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotld=3112440& CENGAGE | MINDTAP HW6 - Capital Budgeting 16C Q Search this course eBook Payback, NPV, and MIRR Your division is considering two investment projects, each of which requires an up-front expenditure of $28 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars): Year Project A Project B 1 2 5 10 20 10 3 15 4 20 8 6 Mostly cloudy a. What is the regular payback period for each of the projects? Round your answers to two decimal places. Project A: Project B: years years b. What is the discounted payback period for each of the projects? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: years years c. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? The firm should undertake -Select- . d. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? The firm should undertake -Select- . e. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? The firm should undertake -Select- . f. What is the crossover rate? Round your answer to two decimal places. % g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % 6:58 PM 10/26/2022 A-Z Office A+ MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotId=3112440& >>> CENGAGE | MINDTAP Q Search this course HW6 - Capital Budgeting Project S has a cost of $11,000 and is expected to produce benefits (cash flows) of $3,400 per year for 5 years. Project L costs $23,000 and is expected to produce cash flows of $6,900 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $ Project L: $ Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, -Select- would be selected. Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S: Project L: % % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, -Select- would be selected. Calculate the two projects' MIRRS, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: Project L: % % Which project would be selected, assuming they are mutually exclusive? Based on the MIRR values, -Select- would be selected. Calculate the two projects' PIs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to three decimal places. Project S: Project L: Which project would be selected, assuming they are mutually exclusive? Based on the PI values, -Select- would be selected. A-Z Office A+ 16C Mostly cloudy Q 6:58 PM 10/26/2022 >>> MindTap - Cengage Learning X + ng.cengage.com/static/nb/ui/evo/index.html?elSBN 9780357114537&id=1586575338&snapshotld=3112440& CENGAGE | MINDTAP HW6 - Capital Budgeting Project L: $ Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, -Select- would be selected. Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S: Project L: % % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, -Select- would be selected. Calculate the two projects' MIRRS, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to two decimal places. Project S: Project L: % % Which project would be selected, assuming they are mutually exclusive? Based on the MIRR values, -Select- would be selected. Calculate the two projects' PIs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to three decimal places. Project S: Project L: Which project would be selected, assuming they are mutually exclusive? Based on the PI values, -Select- would be selected. Which project should actually be selected? Q Search this course A-Z Office A+ -Select- should actually be selected. 16C Mostly cloudy Q 6:58 PM 10/26/2022