Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need answers for all the 4 questions. Thanks Please consider the following information for the next three questions: FINAL Inc. is evaluating a short-term project

image text in transcribedimage text in transcribedimage text in transcribedNeed answers for all the 4 questions. Thanks

Please consider the following information for the next three questions: FINAL Inc. is evaluating a short-term project that requires a $200,000 investment. The anticipated cash flows are $50,000 in the first year, $30,000 in the second year, and $170,000 for the third year. There is no salvage value for this project. FINAL Inc. has a D/E ratio of 1/2. Their most recent $1000 face value bond is selling for $1100. This bond has a coupon rate of 10% which is paid semiannually and has 10 years to maturity. FINAL Inc. just paid a dividend of $5, and its stock is currently selling for $95. The company is anticipated to grow at 3% for the foreseeable future. The applicable corporate tax rate for FINAL is 20%. What is the approximate cost of debt for FINAL Inc. before taxes? 8.46 4.24 8.50 4.25 Continuing with the previous question, what is the cost of equity for FINAL? 7.20% 6.42% 9.12% 8.42% Question 4 Continuing with the previous question, what is the WACC for FINAL? 5.62% 7.89% 9.00% 13.15% Continuing with the previous question, what is the approximate NPV of this investment? $7480.81, $3,333 5800.19$ $4000.23

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

Essentials Of Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

6th Edition

0073226386, 978-0073226385

More Books

Students also viewed these Finance questions

Question

How were individuals assigned to the project? Describe the process.

Answered: 1 week ago