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Please show all formulas on how you solved these questions using excel. thank you. 7) Assume the following balance sheet information: (10 points) Price per
Please show all formulas on how you solved these questions using excel. thank you.
7) Assume the following balance sheet information: (10 points) Price per unit $1,000 $100 Coupn Rate 8% # of units 100.000 5,000,000 Book Value Bonds $100,000,000 Common Stock $275,000,000 Retained Earnings $400,000,000 Maturity 10 years Let the tax rate = 34%. Assume that the beta of the common stock is 1.2, the risk-free rate is 2%, and the market premium is 8%. Assume the firm would like to increase its debt so that its L, the percentage of debt financing, is 40%. a) Determine the new ATWACOC b) Determine the new Cost of Equity c) Determine the new value of the firm if the cash flows may be represented as a constant growth of 6%. d) Determine the new price of the common stock 8) Assume you are considering two mutually exclusive projects. The cash flows for project A and B are given below. Assume a discount rate of 9%. Project's A & B can be renewed. Which project you would take? (10 points) time 0 1 2 3 4 Project A -$14,000,000.00 $1,000,000.00 $2,000,000.00 $6,000,000.00 $6,000,000.00 $5,000,000.00 $3,000,000.00 $0.00 $0.00 $0.00 $0.00 Project B -$18,750,000.00 $3,000,000.00 $3,000,000.00 $3,000,000.00 $3,000,000.00 $3,000,000.00 $5,000,000.00 $3,000,000.00 $5,000,000.00 $5,000,000.00 $2,000,000.00 5 6 7 8 9 10Step by Step Solution
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