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.

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

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

How would the cost of capital change if the capital structure changed.
If the company needs a split of 25% debt to 75% equity to have an optimal capital structure, would that be optimal.
What would happen to the cost of capital if it is not optimal and the firm moves to optimal.

A company is considering building a new and improved production facility for one of its existing products. It would be built on a piece of vacant land that the firm owns. This land was acquired four years ago at a cost of $500,000; it has a current market value of $800,000. The building can be erected for $600,000. Machinery (eq

I need some help getting started with the following:
A) How does the cost of capital calculations impact on investment decisions?
B) While most financial professionals are very comfortable with the textbook calculation, there are a few gray areas worthy of note because of their potential impact on capital budgeting decisio

In a world that is not perfect but risk neutral assume that the firm has projects worth $100 in down state and $500 in the up-state. The cost of capital for projects is 25%. However, if you could finance it with 50-50 debt, the cash flow rights alone are enough to make the cost of capital lower than 20%. Managers are intransigen

See attached.
Bonds
1. Using AT&T (NYSE: T) http://finance.yahoo.com/q?s=t, discuss and analyze the firm's outstanding bond issues.
WACC
2. Using AT&T, collect the following information:
a. Cost of debt, yield to maturity on bonds and the firm's tax rate.
b. Cost of preferred stock, if any, computed using the divide