-Suppose a firm has 26.20 million shares of common stock outstanding at a price of $36.78 per share. The firm also has 208000.00 bonds outstanding with a current price of $1,074.00. The outstanding bonds have yield to maturity 7.49%. The firm’s common stock beta is 2.305 and the corporate tax rate is 40.00%. The expected market return is 10.94% and the T-bill rate is 5.60%. Compute the following:
a) Weight of Equity of the firm
b) Weight of Debt of the firm
c) Cost of Equity of the firm
A firm has a WACC of 9.33% and is deciding between two mutually exclusive projects. Project A has an initial investment of $61.84. The additional cash flows for project A are: year 1 = $19.55, year 2 = $37.69, year 3 = $52.57. Project B has an initial investment of $71.35. The cash flows for project B are: year 1 = $59.29, year 2 = $49.99, year 3 = $39.48. Calculate the Following:
a) Payback Period for Project A:
b) Payback Period for Project B:
c) NPV for Project A:
d) NPV for Project B:
d) After Tax Cost of Debt of the firm
e) WACC for the Firm
