Calculate the cost | Business & Finance homework help

 
 

 

 

 

Use the next data for questions 1 by way of Four

 

Rollins Company is estimating its WACC.  It’s present and goal capital construction is 20 % debt, 20 % most popular inventory, and 60 % widespread fairness. Its bonds have a 12 % coupon charge, paid semiannually, a present maturity of 20 years, and promote for $1,zero40.  The agency may promote, at par, $100 most popular inventory which pays a $12.00 annual most popular dividend.  Rollins’ widespread inventory beta is 1.2, and the risk-free charge is 10 %. Rollins is a constant-growth agency which simply paid a dividend of $2.00.  Its inventory sells for $27.00 per share, and has a progress charge of three %.  The floatation price is 5% for debt, 10% for most popular inventory, and 25% for widespread inventory.  The agency’s marginal tax charge is 40 %.

 

Query 1 (price 15 out of 100 attainable factors for the quiz)

Half a. Calculate the price of present debt.

Half b. Calculate the price of new debt.

 

Query 2 (price 15 out of 100 attainable factors for the quiz)

Half a. Calculate the price of present most popular inventory.

           

Half b. Calculate the price of new most popular inventory.

 

Query three (price 15 out of 100 attainable factors for the quiz)

Half a. Calculate the price of present widespread inventory.

Half b. Calculate the price of new widespread inventory.

            =[(2.00*(1+0.08)/27(1-0.06)]+zero.08=zero.1651=16.51%)

 

Query Four (price 15 out of 100 attainable factors for the quiz)

Half a. Calculate the weighted common price of capital (WACC) for present capital

Half b. Calculate the weighted common price of capital (WACC) for new capital

 

Query 5 (price 15 out of 100 attainable factors for the quiz)

On condition that the corporate’s required return (WACC) is 10%, rank the 2 following tasks:

Use just one finest methodology to rank the tasks

 

Venture

A

B

Venture life

12 years

12 years

Preliminary funding

$1,200,00zero

$1,500,00zero

Annual working money flows

$180,00zero

$225,00zero

 

Query 6 (price 25 out of 100 attainable factors for the quiz)

Foley Programs is contemplating a brand new funding whose knowledge are proven beneath.  The gear can be depreciated utilizing the MCRS system foundation over the undertaking’s Four-year life, would have a zero salvage worth, and would require some extra working capital that might be recovered on the finish of the undertaking’s life.  Revenues and different working prices are anticipated to be fixed over the undertaking’s life.  What’s the undertaking’s NPV?

 

The accelerated charges for such property are 33%, 45%, 15%, and seven% for Years 1 by way of Four.

 

WACC                                                                                                                          10.zero%

Internet preliminary funding in mounted property                                                                         $75,00zero

Required new working capital                                                                                   $15,00zero

Gross sales revenues, annually                                                                                           $75,00zero

Working prices (excluding depreciation), annually                                                 $25,00zero

Tax charge                                                                                                                         35.zero%