PLEASE HELP ME ANSWER THEM. i HAVE 40 MINUTES LEFT

1. Triad Corporation has established a joint venture with Tobacco Road Construction, Inc., to build a toll road in North Carolina. The initial investment in paving equipment is $80.6 million. The equipment will be fully depreciated using the straight-line method over its economic life of five years. Earnings before interest, taxes, and depreciation collected from the toll road are projected to be $12.7 million per annum for 20 years starting from the end of the first year. The corporate tax rate is 40 percent. The required rate of return for the project under all-equity financing is 13 percent. The pretax cost of debt for the joint partnership is 9.1 percent. To encourage investment in the country's infrastructure, the U.S. government will subsidize the project with a $25.6 million, 15-year loan at an interest rate of 5.6 percent per year. All principal will be repaid in one balloon payment at the end of Year 15. What is the adjusted present value of this 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 2 decimal places. (e.g., 32.16)) $ Adjusted present value 2. If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.15. The company has a target debt-equity ratio of .6. The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 3.6 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 8.2 percent. The bond currently sells for $1,140. The corporate tax rate is 35 percent. a. What is the company's cost of debt? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost of debt % b. What is the company's cost of equity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost of debt % c. What is the company's weighted average cost of capital? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) WACC % 3. The flow-to-equity approach to capital budgeting is a three step process of: 1. None of these. 2. calculating the levered cash flow, the cost of equity capital for a levered firm, then adding the interest expense when the cash flows are discounted. 3. calculating the levered cash flow after interest expense and taxes, the cost of equity capital for a levered firm, and then discounting the levered cash flows by the cost of equity capital. 4. calculating the levered cash flow after interest expense and taxes, the cost of equity capital for a levered firm, and then discounting the levered cash flows at the risk free rate. 5. calculating the unlevered cash flow, the cost of equity capital for a levered firm, and then discounting the unlevered cash flows. 4. Seger, Inc., is an unlevered firm with expected annual earnings before taxes of $23 million in perpetuity. The current required return on the firm's equity is 16 percent, and the firm distributes all of its earnings as dividends at the end of each year. The company has 1.5 million shares of common stock outstanding and is subject to a corporate tax rate of 35 percent. The firm is planning a recapitalization under which it will issue $32 million of perpetual 11 percent debt and use the proceeds to buy back shares. a-1. Calculate the value of the company before the recapitalization plan is announced. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations.) $ Current value a-2. What is the price per share? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Price per share $ b-1. Use the APV method to calculate the company value after the recapitalization plan is announced. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations.) $ Value after recapitalization b-2. What is the price per share after the recapitalization? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Price per share $ c-1. How many shares will be repurchased? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations.) $ Shares repurchased c-2. What is the price per share after the recapitalization and repurchase?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Price per share $ d. Use the flow to equity method to calculate the value of the company's equity after the recapitalization. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations.) Value of the equity $ 5. Financial managers: 1. are reluctant to cut dividends. 2. tend to ignore past dividend policies. 3. prefer cutting dividends over incurring flotation costs. 4. place little emphasis on dividend policy consistency. 5. tend to prefer cutting dividends every time quarterly earnings decline. 6. Alabaster Incorporated has an equity cost of capital of 14%. The debt to value ratio is .6, the tax rate is 35%, and the cost of debt is 8%. What is the cost of equity if Alabaster was unlevered? 1. None of these. 2. 9.05% 3. 11.03% 4. 10.55% 5. 12.55% 7. Debt capacity is often given as a reason for the value of the stock falling when equity is issued. The reason for this is: 1. All of these. 2. the priority position of the equity is lowered. 3. the high issue costs of a debt offering must be paid by the shareholders. 4. management has information that the probability of default has risen, limiting the debt capacity and causing the firm to raise equity capital. 5. None of these 8. In comparison to debt issuance expenses, the total direct costs of equity issues are: 1. meaningless. 2. None of these. 3. considerably less. 4. about the same. 5. considerably greater. 9. The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here: Stock price $ Number of shares Total assets Total liabilities Net income 50 30,000 8,700,00 $ 0 3,600,00 $ 0 $ 600,000 MHMM is considering an investment that has the same PE ratio as the firm. The cost of the investment is $640,000, and it will be financed with a new equity issue. The ROE on the investment would have to be percent (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) if we wanted the price after the offering to be $50 per share (assume the PE ratio still remains constant), and the NPV of the investment would be $ (Leave no cells blank - be certain to enter "0" wherever required.). Accounting dilution occur in this case. Market value dilution occur in this case. 10. Venture capitalists provide financing for new firms from the seed and start-up stage all the way to mezzanine and bridge financing. In exchange for financing, entrepreneurs give: 1. a high interest rate debt instrument and control. 2. the venture capitalists jobs as CEOs and CFOs. 3. up the right to have an initial public offering. 4. an equity position and usually board of director positions. 5. control to a court appointed trustee. 11. The Newton Company has 120,000 shares of stock that each sell for $65. Suppose the company issues 9,000 shares of new stock at the following prices: $65, $50, and $45. What is the effect of each of the alternative offering prices on the existing price per share? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) New shares at $65 New shares at $50 New shares at $45 Share price $ $ $ 12. The first public equity issue that is made by a company is referred to as: 1. a rights issue. 2. an unseasoned issue. 3. Both an initial public offering and an unseasoned issue. 4. an initial public offering. 5. a general cash offer. 13. A group of investment bankers who pool their efforts to underwrite a security are known as a(n): 1. green shoe group. 2. conglomerate. 3. klatch. 4. amalgamate. 5. syndicate. 14. A leveraged lease typically involves a non-recourse loan in which: 1. the third party lenders have a first lien on the assets. 2. None of these. 3. All of these. 4. the lessee's payments go directly to the lender in case of default. 5. the lessor is not obligated in case of default. 15. Your firm is considering leasing a new radiographic device. The lease lasts for 3 years. The lease calls for 4 payments of $25,000 per year with the first payment occurring immediately. The computer would cost $140,000 to buy and would be straight-line depreciated to a zero salvage value over 3 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 12%. The corporate tax rate is 40%. This lease would be classified as a(n): 1. sale and leaseback because the company gets full use of the asset. 2. operating lease because the asset will be obsolete. 3. capital lease because the lease life is greater than 75% of the economic life. 4. operating lease because there is no amortization. 5. leveraged lease because it is being financed