Tango Enterprises has issued 100,000 coupon bonds, with maturity of eight years. Each bond sells for $1,075. The bonds pay semi-annual coupons of 9% on face value of $1,000. What is Tango's cost of debt?

Select one:

a.3.86%

b.6.57%

c.7.15%

d.7.28%

e.7.73%

Unbelievable Deals Inc. has the following capital structure and marginal tax rate of 35%. What is its WACC?

Debt:

• 100,000 coupon bonds
• Eight-year maturity
• Face value of $1,000
• Semi-annual coupon rate of 9%
• Bond price of $1,075

Common shares:

• Risk-free rate = 5%
• Expected market risk premium = 7%
• Beta = 1.2
• Number of common shares = 3,000,000
• Common share price = $30

Preferred shares:

• Par value = $150
• Dividends = $12
• Share price = $95
• Number of preferred shares = 100,000

Select one:

a.7.14%

b.8.80%

c.9.01%

d.10.39%

e.11.56%

Van Bran Inc. is looking into financing a $30 million project with an equity issue. If the firm's underwriter charges a spread (i.e., underwriting fee) of 6% on equity issues, what is the gross amount that must be raised in Van Bran's equity issue?

Select one:

a.$31,914,894

b.$32,000,000

c.$33,264,980

d.$33,684,210

e.$34,042,553

Van Bran Inc. is looking into financing a $30 million project with an equity issue. If the firm's underwriter charges a spread (i.e., underwriting fee) of 6% on equity issues, what is the gross amount that must be raised in Van Bran's equity issue?

Select one:

a.$31,914,894

b.$32,000,000

c.$33,264,980

d.$33,684,210

e.$34,042,553

Walter Inc. had net income of $650,000, debt-equity ratio of 1, book value of assets of $5 million, and 1,000,000 common shares outstanding. The company just paid a dividend per share of $0.5. What is Walter's estimated growth rate?

Select one:

a.4.5%

b.5.0%

c.6.0%

d.7.5%

e.10.5%

A firm is anticipated to generate an EBIT of $2 million, with depreciation of $200,000, change in NWC of $120,000, and capital spending of $350,000 per year. The firm's marginal tax rate is 40%. What is the firm's annual adjusted cash flow from assets without debt financing?

Select one:

a.$830,000

b.$930,000

c.$1,030,000

d.$1,730,000

e.$1,970,000