Questions---

Taunton Corp. Suppose you have been hired as a financial consultant to Taunton Corp., a large, publicly traded firm that is the market share leader in radon detection systems (RDSS). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. The project will require an investment of $9.0 million dollars and the president of the company wants to be sure she derstands her cost of capital before going ahead with the decision. Market information for the latest year-end cember 31/2020) is as follows: The company has issued 14,300 bonds, each with a par value of $1,000 and a coupon rate of 5.40 percent (payable semi-annually). The bonds were issued 9 years ago with a 20 year maturity. They are currently selling for $1039.00 each. ock 151,000 preferred shares have been authorized (with 127,000 issued and outstanding). The closing price of preferred shares was $31.30 per share. 507,000 common shares have been authorized (with 451,000 shares issued and outstanding). Common shares are selling for $7700 US 85 follows. The company has issued 14,300 bonds, each with a par value of $1,000 and a coupon rate of 5.40 percent (payable semi-annually). The bonds were issued 9 years ago with a 20 year maturity. They are currently selling for $1039.00 each. 151,000 preferred shares have been authorized (with 127,000 issued and outstanding). The closing price of preferred shares was $31.30 per share. 507,000 common shares have been authorized (with 451,000 shares issued and outstanding). Common shares are selling for $77.00 per share. Requirements: A. Find market values of outstanding bonds, preferred shares and common shares: 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. (e.g. $12.34)) b. What is the total market value of bonds at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) 2. Preferred shares: What is the total market value of preferred shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) 3. Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, 51,234,000 not $1.234 million.) B. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 (Round your answer to two decimal places. (eg. 12.34). Do not enter the percent sign.) C. Calculate the after-tax cost of the various components of WACC: (Round your answer to two decimal places. (eg. 12.34). Do not enter the percent sien.) 1. Bonds a. What is the nominal yield-to-maturity? b. What is the effective yield-to-maturity? c. Calculate the after-tax cost of new debt (using the effective yield-to-maturity). 2. Preferred shares: 3. Common equity in the form of retained earnings: What is the need tege Cost of capital Enter your answer to be decimal places. (ez 12.34). Do not enter the percent sien.) 1. the company uses new debt, new preferred shares and just retained earnings? found all figures to two decimal places. ee 1234). Do not enter the percent sign) Debt Pref Common 2 the company uses new debt, new preferred shares and new common shares? (Round all figures to two decimal places. (e.g. 12.34). Do not enter the percent sign.) Weights Debt Pref Common much of the new capital projects can be funded without using new shareholders? Taunton Corp. Suppose you have been hired as a financial consultant to Taunton Corp., a large, publicly traded firm that is the market share leader in radon detection systems (RDSS). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. The project will require an investment of $9.0 million dollars and the president of the company wants to be sure she derstands her cost of capital before going ahead with the decision. Market information for the latest year-end cember 31/2020) is as follows: The company has issued 14,300 bonds, each with a par value of $1,000 and a coupon rate of 5.40 percent (payable semi-annually). The bonds were issued 9 years ago with a 20 year maturity. They are currently selling for $1039.00 each. ock 151,000 preferred shares have been authorized (with 127,000 issued and outstanding). The closing price of preferred shares was $31.30 per share. 507,000 common shares have been authorized (with 451,000 shares issued and outstanding). Common shares are selling for $7700 US 85 follows. The company has issued 14,300 bonds, each with a par value of $1,000 and a coupon rate of 5.40 percent (payable semi-annually). The bonds were issued 9 years ago with a 20 year maturity. They are currently selling for $1039.00 each. 151,000 preferred shares have been authorized (with 127,000 issued and outstanding). The closing price of preferred shares was $31.30 per share. 507,000 common shares have been authorized (with 451,000 shares issued and outstanding). Common shares are selling for $77.00 per share. Requirements: A. Find market values of outstanding bonds, preferred shares and common shares: 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. (e.g. $12.34)) b. What is the total market value of bonds at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) 2. Preferred shares: What is the total market value of preferred shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) 3. Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, 51,234,000 not $1.234 million.) B. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 (Round your answer to two decimal places. (eg. 12.34). Do not enter the percent sign.) C. Calculate the after-tax cost of the various components of WACC: (Round your answer to two decimal places. (eg. 12.34). Do not enter the percent sien.) 1. Bonds a. What is the nominal yield-to-maturity? b. What is the effective yield-to-maturity? c. Calculate the after-tax cost of new debt (using the effective yield-to-maturity). 2. Preferred shares: 3. Common equity in the form of retained earnings: What is the need tege Cost of capital Enter your answer to be decimal places. (ez 12.34). Do not enter the percent sien.) 1. the company uses new debt, new preferred shares and just retained earnings? found all figures to two decimal places. ee 1234). Do not enter the percent sign) Debt Pref Common 2 the company uses new debt, new preferred shares and new common shares? (Round all figures to two decimal places. (e.g. 12.34). Do not enter the percent sign.) Weights Debt Pref Common much of the new capital projects can be funded without using new shareholders