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please show work through paper and pen! does this help?? (2) Company BW has borrowed $2,500,000 from a bank. The nominal interest rate is 6.6%
please show work through paper and pen!
does this help??
(2) Company BW has borrowed $2,500,000 from a bank. The nominal interest rate is 6.6% and BW is making monthly payment. Find the annual after-tax effective cost of bank loan. [4 points] 4. The following six parts are ALL based on the status quo of company BW. (1) Company BW has issued 10,000 zero-coupon bonds with a face value of $1,000. Those bonds will mature in 8 years and the current market price is $576.18 per bond. Marginal corporate income tax rate is 20%, find the annual after-tax effective cost of debt. [4 points] (2) Company BW has borrowed $2,500,000 from a bank. The nominal interest rate is 6.6% and BW is making monthly payment. Find the annual after-tax effective cost of bank loan. [4 points] (3) Company BW has 50,000 shares of preferred stock outstanding. The par value is $10 and dividend rate is 12%. Dividends are paid every six months and the current market price of the preferred is $8.76 per share. Find the annual effective cost of preferred stocks. [4 points] (4) Company BW has 1,000,000 shares outstanding and the market price is $22 per share. Investors believe that company BW's beta is 1.78 and market risk premium is 8.5%. If risk-free 1 rate is 2.5%, which is the cost of common stocks? [4 points] (5) Find the overall (annual) cost of capital for BW (WACC), based on questions 4.1-4.4. [5 points] 4 (6) Company BW has the following two investment opportunities (A and B). Which project is better, according to MIRR? [10 points] Which project is better, according to Discounted Payback period? [10 points] Step by Step Solution
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