Helpful tip: The text is "Corporate Finance" 8th edition, Ross. Westerfield. Jaffe

All calculations must be shown. For problems that have an Excel template, be sure to download the template from the publisher's web site, and save as an Excel file.
Chapter 9: Problem 25 (template is available)
Chapter 10: Problem 4 (template is available)
Chapter 12: Problems 5 and 7 (both chapter 12 problems have a template)

Chapter 9, #25:
Calculating Investment Returns - You bought one of the Bergen Manufacturing Co.'s 8 percent coupon bonds one year ago for $1,028.50. These bonds make annual payments and mature six years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 7 percent. If the inflation rate was 4.8 percent over the past year, what would be your total real return on investment?

Chapter 10, #4:
Portfolio Expected Return - You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 9 percent. If your goal is to create a portfolio with an expected return of 12.2 percent, how much money will you invest in Stock X? In Stock Y?

Chapter 12, #5:
Calculating WACC - Millineaux Corporation has a target capital structure of 55 percent common stock and 45 percent debt. Its cost of equity is 16 percent, and the cost of debt is 9 percent. The relevant tax rate is 35 percent. What is Mullineaux's WACC?

Chapter 12, #7:
Finding the Capital Structure - Fama's Llamas has a weighed average cost of capital of 11.5 percent. The company's cost of equity is 16 percent, and its cost of debt is 8.5 percent. The tax rate is 35 percent. What is Fama's debt - equity ratio?

PART B:
Read about "The Cost of Capital for Goff Computer, Inc"

Question: (#4 in the text)
You now need to calculate the cost of debt for Dell. Go to www.nasdbondinginfo..com , enter Dell as the company, and find the yield to maturity for each of Dell's bond. What is the weighted average cost of debt for Dell using the book value weights and the market value weights? Does it make a difference in this case if you use book value weights or market value weights?

Solution Summary

The solution examines corporate finance and the cost of capital.

A firm has a corporate tax rate of 35%, a cost of debt of 8.25%, with a 15% cost on its equity capital. There is $15,000,000 in debt and $25,000,000 in equity in its capital structure. What is the weighted average cost of capital of this firm?
The same firm as in question 4 above changes its capital structure to reflect a 50/

A) How would not having to pay taxes impact our future cash flows? Would the depreciation tax shield offset the actual tax cost? How would this impact a project's Net Profit Value (NPV)?
B) In what ways do operating risk and financial risk impact the required return (cost of capital) of a potential project?

The financial manager of a firm determines the following schedules of cost of debt andcost of equity for various combinations of debt financing: Find the WACC.
1.Debt/Assets After-Tax Cost of Debt Cost of Equity WACC
0% 4% 8%
10%

What is the weighted average cost of capital for a firm in the 35% corporate tax bracket, with the following:
Financing Amount Rate of Interest for each.
Equity $ 1,150,000 11.57%
Debt $

I need 100 word original notes in answering the following questions:
1. What is operating leverage and how does it influence a project?
2. What are the two methods for estimating debit cost of capital, and what do you do when there is default risk? Explain the circumstances in which you would use each method.
3. In what

(Calculating the WACC) The required return on debt is 8%, the required return on equity
is 14%, and the marginal tax rate is 40%. If the firm is financed 70% equity and 30% debt,
what is the weighted average cost of capital?
Please show how you got your answer in excel.

A firm is financed with the following securities
ï?§ Weight of common stock in the capital structure is 40%, beta=1.2 (risk free rate=6% and market return = 10%)
ï?§ Weight of corporate bond in the capital structure is 50%, 20-year bond, face value=$1,000, market price per bond = $900, and annual coupon rate = 6%. (Assume

Question: The weighted average cost of capital for firm X is currently 10%. Firm X is considering a new project, but must raise new debt to finance the project. Debt represents 25% of the capital structure. If the after tax cost of debt will rise form 7% to 8%, what is the marginal cost of capital?
A)10.25%,
B)10.75%
C

You have been asked to calculate the weighted average cost of capital for Future Flow Enterprises (FFE) and have been provided with the following information to complete the task.
The company's effective tax rate is 40%
FFE currently has a bond issue outstanding, with a market price of $1,136.28 per $1,000