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need questions part 1 and 2 please! will leave a review Intro Bob's is a retail chain of hardware stores. The firm has 21,000 shares
need questions part 1 and 2 please! will leave a review
Intro Bob's is a retail chain of hardware stores. The firm has 21,000 shares of stock outstanding that are currently valued at $63 a share. Firm's Beta is 1.2 . The risk-free rate is 1% and the market expected return is 7.4%. Firm expects to pay an annual dividend of $3 in one year. Dividend is expected to grow indefinitely at 5% annually. The firm also has 500 coupon bonds outstanding that have a face value of $1,000, a market price of $1,168, mature in 6 years and have a YTM of 5.5%. The tax rate is 35%. Part 1 Attempt 1/3 for 10 pts. What is the company's weighted average cost of capital if CAPM is the right method for cost of equity? Part 2 Attempt 1/3 for 10 pts. The firm is considering expanding by building a new superstore. The risks associated with the superstore are comparable to the risks of the firm's current operations. The superstore will require an initial investment of $12 million and is expected to generate CF1 CF11 of $1.4 million annually over the 11-year period. The initial investment will be depreciated on a straight line basis over the life of the project. At the end of year 11, the firm expects to sell the superstore for $6.7 million. What is the NPV of superstore project (in millions)Step by Step Solution
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