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please answer 6 questions attached to this document in the next hour. Thanks. 1. Award: 10.00 points The Zombie Corporation's common stock has a beta
please answer 6 questions attached to this document in the next hour.
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1. Award: 10.00 points The Zombie Corporation's common stock has a beta of 1.7. If the risk-free rate is 5.7 percent and the expected return on the market is 11 percent, what is the company's cost of equity capital? (Round your answer to 2 decimal places. (e.g., 32.16)) Cost of equity capital % 14.71 References WorksheetDifficulty: BasicLearning Objective: 14-01 How to determine a firms cost of equity capital. 2. Award: 10.00 points Jiminy's Cricket Farm issued a 10-year, 10 percent semiannual bond 4 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 35 percent. a. What is the pretax cost of debt? (Do not round intermediate calculation and round your answer to 2 decimal places. (e.g., 32.16)) Cost of debt % b. What is the aftertax cost of debt? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) Cost of debt % c. Which is more relevant, the pretax or the aftertax cost of debt? Aftertax cost of debt Pretax cost of debt References WorksheetDifficulty: BasicLearning Objective: 14-02 How to determine a firms cost of debt. 3. Award: 10.00 points Mullineaux Corporation has a target capital structure of 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 5 percent. The relevant tax rate is 34 percent. a. What is Mullineaux's WACC? (Round your answer to 2 decimal places. (e.g., 32.16)) % WACC b. What is the aftertax cost of debt? (Round your answer to 2 decimal places. (e.g., 32.16)) % Cost of debt References WorksheetDifficulty: BasicLearning Objective: 14-03 How to determine a firms overall cost of capital. 4. Award: 10.00 points Caughlin Company needs to raise $65 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company has a target capital structure of 65 percent common stock, 10 percent preferred stock, and 25 percent debt. Flotation costs for issuing new common stock are 9 percent, for new preferred stock, 6 percent, and for new debt, 4 percent. What is the true initial cost figure the company should use when evaluating its project? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.) Initial cost References $ WorksheetDifficulty: BasicLearning Objective: 14-04 How to correctly include flotation costs in capital budgeting projects. 5. Award: 10.00 points Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. Bond Coupon Rate 1 6.2% 2 3 4 7.7 7.4 7.0 Price Quote Maturity 106.0 5 years 6 114.72 8 years 113.27 15.5 years 102.51 25 years Face Value $ 42,000,000 37,000,000 57,000,000 52,000,000 If the corporate tax rate is 30 percent, what is the aftertax cost of Ying's debt? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost of debt % References WorksheetDifficulty: IntermediateLearning Objective: 14-02 How to determine a firms cost of debt. 6. Award: 10.00 points Berta Industries stock has a beta of 1.25. The company just paid a dividend of $0.40, and the dividends are expected to grow at 5 percent. The expected return on the market is 12 percent, and Treasury bills are yielding 5.0 percent. The most recent stock price for Berta is $67. a. Calculate the cost of equity using the DCF method. (Round your answer to 2 decimal places. (e.g., 32.16)) DCF method % b. Calculate the cost of equity using the SML method. (Round your answer to 2 decimal places. (e.g., 32.16)) SML method % References WorksheetDifficulty: IntermediateLearning Objective: 14-01 How to determine a firms cost of equity capital. 2016 McGraw-Hill Education. All rights reservedStep by Step Solution
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