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pls help with these asap! will give good rating! (Estimated time allowance: 20 minutes) CePina Company currently does not use any debt at all (it
pls help with these asap! will give good rating!
(Estimated time allowance: 20 minutes) CePina Company currently does not use any debt at all (it is an all-equity firm). The firm has 3,000,000 shares selling for $43 per share. Its beta is 1.2, and the current risk-free rate is 4.20%. The market risk premium for the coming year is 8.4%, CePina Company will sell 543,000,000 in corporate bonds with a $1.000 par value. The bonds have a yield to maturity of 9%. When the bonds are sold, the beta of the company will increase to 1.5. CePina will use the entire proceeds of the bond sale to repurchase an equal dollar amount of its equity (buyback shares). The corporate tax rate is 15% 1. What is the WACC hf CePina Company before the bond sale? Enter using the %, for example if you obtain 0.20 then enter 20%. A 2. What is the market value of debt after the bond sale? Do not use dollar sign. Round to the nearest dollar. Use commas to separate thousands. A 3. What is the market value of equity after the bond sale? Do not use dollar sign. Round to the nearest dollar. Use commas to separate thousands. A 4. What is the weight for equity in the capital structure (the value D/V) - used to compute the WACC? Enter using the %, for example if you obtain 0.20 then enter 20% A 5. What is the cost of debt after the bond sale? Enter using not use dollar sign. Round to the nearest dollar. Use commas to separate thousands. A 3. What is the market value of equity after the bond sale? Do not use dollar sign. Round to the nearest dollar. Use commas to separate thousands A 4. What is the weight for equity in the capital structure (the value D/V) - used to compute the WACC? Enter using the %, for example if you obtain 0.20 then enter 20% A 5. What is the cost of debt after the bond sale? Enter using the % and TWO decimal places, for example if you obtain 4.20% then enter 4.20% A 6. What is the cost of equity after the bond sale? Enter using the % and TWO decimal places, for example if you obtain 4.20% then enter 4.20% A 7. What is the adjusted WACC of CePina Company after the bond sale? Enter using the % and TWO decimal places, for example if you obtain 4.20% then enter 4.20% EXS Inc. currently has two products, low-priced and hig-priced computers. EXS Inc. has decided to sell a new line of medium-priced computers. The plant and equipment required for producing the new line of computers costs $300 and will be depreciated down to zero over 20 years using straight-line depreciation. It is expected that the plant and equipment can be sold (market or scrap value) for $120 at the end of 10 years. The new computers will also require today an increase in net working capital of $50 that will be returned at the end of the project. Sales for the new line of computers are estimated at $400 a year. Variable costs are 70% of sales. The project is expected to last 10 years. In addition to the production variable costs, the fixed costs each year will be $60. The company has spent $6 in research and a marketing study that determined the company will lose $20 in sales a year of its existing low-priced computers (erosion of sales). The production variable cost of the existing low-priced computers is $16 a year. However, the study also determined that the company will gain $14 in sales a year of its existing high-priced computers (synergies); the production variable cost of the existing high-priced computers is $12 a year. The tax rate is 20 percent and the cost of capital is 10%. 1. What is the initial outlay (10) for this project? A 2. What is the annual Earnings before Interests, Taxes, and Depreciation (EBIDTA) for this project? A 3. What is the net income for this project? A 4. What is the operating cash flow (OCF) for this project? A 5. What is the remaining book value for the plant at equipment at the end of the project? A 6. What is the tax effect from selling the plant and equipment at the end of the project? A 7. What is the termination value for this project? A Step by Step Solution
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