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PLEASE answer all i will leave WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: a. Calculate the
PLEASE answer all i will leave
WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: a. Calculate the weighted average cost of capital using book value weights. b. Calculate the weighted average cost of capital using market value weights. c. Compare the answers obtained in parts a and b. Explain the differences. a. The firm's weighted average cost of capital using book value weights is \%. (Round to two decimal places.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) WACC and target weights After careful analysis, Dexter Brothers has determined that its optimal capital structure is composed of the sources and target market value weights shown in the following table: The cost of debt is estimated to be 4.4%; the cost of preferred stock is estimated to be 10.6%; the cost of retained eamings is estimated to be 14.1%; and the cost of new common stock is estimated to be 16.1%. All of these are after-tax rates. The company's debt represents 23%, the preferred stock represents 5%, and the common stock equity represents 72% of total capital on the basis of the market values of the three components. The company expects to have a significant amount of retained eamings available and does not expect to sell any new common stock. a. Calculate the weighted average cost of capital on the basis of historical market value woights. b. Calculate the weighted average cost of capital on the basis of target manket value woights. c. Compare the answers obtained in parts a and b. Explain the differences. Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) NPV-Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table: a. Calculate the net present value (NPV) of each press. b. Using NPV, evaluate the acceptability of each press. c. Rank the presses from best to worst using NPV. d. Calculate the profitability index (Pl) for each press. e. Rank the presses from best to worst using PI. a. The NPV of press A is $ (Round to the nearest cent.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Step by Step Solution
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