Please, please, please help.

Instructions: This project requires you to apply the concepts and methods learned so far in the course.This is an individual project.You are permitted to discuss this project within your respective group of fellow students.Minor Project is due by Wednesday, November 18th Midnight.

Assignment:You work for the Berea Amalgamated Products Company that produces coloring books, velvet paintings and other fine arts.

You are proposing a new venture, to branch out into figurine animals and cartoon characters but this will require new equipment and a capital outlay.

You need toexplore the financialsbeforefurther researching unto a complete recommendation relative to this proposed venture. Therefore, you arenotconcerned with making "a complete recommendation relative to this proposed venture." Your task is to tender the mathematical solutions to the deliverables that will be used to find an optimal capital structure. You donotneed to determine the optimal capital structure.

Pertinent financial information is below briefly stated:

Cash	2,000,000	Accounts Payable and Accruals	18,000,000
Accounts Receivable	28,000,000	Notes Payable	40,000,000
Inventories	42,000,000	Long-Term Debt	60,000,000
		Preferred Stock	10,000,000
Net Fixed Assets	133,000,000	Common Stock	77,000,000
Total Assets	205,000,000	Total Claims	205,000,000

• Last years sales were $225,000,000.
• The company has 60,000 bonds (par value $1,000.; 30-year life) with 15 years until maturity. The bonds carry a 10 percent annual coupon, and are currently selling for $874.78.
• You also have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The current market price is $90.00. Any new issues of preferred stock would incur a $3.00 per share flotation cost.
• The company has 10 million shares of common stock outstanding with a currently price of $14.00 per share. The stock exhibits a constant growth rate of 10 percent. The last dividend (D₀) was $.80. New stock could be sold with 15% flotation costs.
• The risk-free rate is currently 6 percent, and the rate of return on the stock market as a whole is 14 percent. Your stocks beta is 1.22.
• Stockholders require a risk premium of 5 percent above the return on the firms bonds.
• The firm expects to have additional retained earnings of $10 million in the coming year, and expects depreciation expenses of $35 million.
• Your firm does not use notes payable for long-term financing.
• The firm considers its currentmarket valuecapital structure to be optimal, and wishes to maintain that structure. (Hint: Examine the market value of the firms capital structure, rather than its book value.)
• The firm is currently using its assets at capacity.
• The firms management requires a 2 percent adjustment to the cost of capital for risky projects.
• Your firms federal + state marginal tax rate is 40%.
• Your firms dividend payout ratio is 50 percent, and net profit margin was 8.89 percent.

PROJECT DELIVERABLES: Steps to WACC for the Optimal Capital Structure

Find the costs (rate/percentage under current market conditions) of the following individual capital components:

Long-term debt, Bonds. [Hint:PV=-$874.78 (current selling price of Bonds), FV = $1000, PMT=$100, N=15 solve for I/Y].

This is acalculator (Texas Instruments BA II Plus Financial Calculator) problemand if you follow the hints you will find the effective rate (see textbook appendix 10B, page 338:Bond Valuation)CLICKMinor Project #1.a. Calculator Paradigm p. 338.pdf

New Preferred stock

This is acalculator (Texas Instruments BA II Plus Financial Calculator) problem

New common stock

This is acalculator (Texas Instruments BA II Plus Financial Calculator) problem(see textbook appendix 10B, pages 337-342)

Compute the current Total Value of the Firm depicting its long-term elements of the capital structure.

Determine the target percentages for the optimal capital structure: i.e. the weighted average cost of capital (WACC) using current values.