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Please help me solve in excel using excel funtions whenevr possible ABC Company has a target Debt Ratio of 5 0 % . ABC has
Please help me solve in excel using excel funtions whenevr possible
ABC Company has a target Debt Ratio of ABC has a debt issue outstanding that is
currently trading at of its par value of $ The outstanding issue pays annual
interest payments, has a coupon rate of and years remaining until maturity; new
debt with a year original maturity will incur an flotation cost. Further, ABC's
common stock trades currently at a price of $ and the market expects ABC to pay a
dividend in one year of $ABC just paid a dividend of $ and this growth rate is
expected to continue; ABC pays out all net income as dividends; and new equity will
incur a flotation cost. ABC's tax rate is Points
a What is the YTM on ABC's existing debt?
b What is ABC s before tax cost of debt?
c What is ABC s aftertax cost of debt?
d What is ABC s expected future growth rate?
e What is ABC s cost of internal equity?
f What is ABC s cost of external equity?
g What is ABC s WACC with internal equity?
h What is ABC's WACC with external equity?
ABC is currently evaluating two mutually exclusive projects. Project A has a time
equipment cost of $ and is expected to return cash flows of $ per year for
the next years. Project B has a time equipment cost of $ and is expected to
return cash flows of $ per year for the next years.
i What is the IRR for project
j What is the IRR for project B
k What is the NPV for project A
What is the NPV for project B
m Which project should ABC adopt?
n Why?
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