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# \$10.00Two Corporate Finance Questions

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• Due on May. 29, 2012
• Asked on May. 25, 2012 at 11:18:05AM

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Q:

1. Calculate Weighted Average Cost of Capital (WACC)

Debt 30%

Preferred Stock 15

Common Equity  55

Bond Coupon Rate  13%

Bond Yield to Maturity    11%

Dividend, Expected Common    \$3.00

Dividend, preferred \$10.00

Price, common \$50.00

Price, preferred \$98.00

Flotation cost, preferred  \$5.50

Growth Rate   8%

Corp tax rate   30%

Calculate Individual costs for each security and weighted average cost of capital

2. Make capital budgeting decision using various valuation methods:

Company A is considering two mutually exclusive projects with the following assumed cash flow profiles:

Year          Project A       Project B

0                -\$30,000         -\$50,000

1                 \$10,000          \$15,000

2                 \$10,000          \$15,000

3              \$10,000           \$15,000

4              \$10,000           \$15,000

5 and after        0                        0

Company A’s cost of capital is 10%

Calculate the following values for each project using the time value tables and/or MS Excel.

A)    Payback period

B)    NPV

C)    Profitability Index

D)    IRR

E)     Make a recommendation as to the best project, if any for Company A’s undertaking.

Available Tutorials to this Question

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A+ tutorial in excel sheet
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• Posted on May. 25, 2012 at 11:45:56AM
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A:
Preview: ... w if you need f ...

The full tutorial is about 13 words long plus attachments.

Attachments:
Coporate finance - questions for Honestdwey.xls (14K)

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I have attached both the word and excel file to cleat concept
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• Posted on May 25, 2012 at 3:31:01PM
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A:
Preview: ... word and ex ...

The full tutorial is about 12 words long plus attachments.

Attachments:
New Microsoft Office Excel Worksheet.xlsx (11K)
finance.docx (15K) (Preview)