Compute the cost of the​ following:

a. A bond that has ​$1000 par value​ (face value) and a contract or coupon interest rate of 11 percent. A new issue would have a floatation cost of 6 percent of the ​$1125 market value. The bonds mature in 9 years. The​ firm's average tax rate is 30 percent and its marginal tax rate is 32 percent.

b. A new common stock issue that paid a ​$1.50 dividend last year. The par value of the stock is​ $15, and earnings per share have grown at a rate of 7 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant​ dividend-earnings ratio of 30 percent. The price of this stock is now ​$31​, but 8 percent flotation costs are anticipated.

c. Internal common equity when the current market price of the common stock is ​$48. The expected dividend this coming year should be ​$3.00​, increasing thereafter at an annual growth rate of 11 percent. The​ corporation's tax rate is 32 percent.

d. A preferred stock paying a dividend of 9 percent on a ​$100 par value. If a new issue is​ offered, flotation costs will be 12 percent of the current price of ​$175. e. A bond selling to yield 12 percent after flotation​ costs, but before adjusting for the marginal corporate tax rate of 32 percent. In other​ words, 12 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows​ (principal and​ interest).

a. What is the​ firm's after-tax cost of debt on the​ bond? % ​(Round to two decimal​ places.)

b. What is the cost of external common​ equity? ​% ​(Round to two decimal​ places.)

c. What is the cost of internal common​ equity? ​% ​(Round to two decimal​ places.)

d. What is the cost of capital for the preferred​ stock? ​% ​(Round to two decimal​ places.)

e. What is the​ after-tax cost of debt on the​ bond? % ​(Round to two decimal​ places.)

Stocks A, B, and C have expected returns of 20 percent, 20 percent, and 16 percent, respectively, while their standard deviations are 49 percent, 20 percent, and 20 percent, respectively. If you were considering the purchase of each of these stocks as the only holding in your portfolio and the risk-free rate is 0 percent, which stock should you choose? (Round answers to 2 decimal places, e.g. 15.25.)

1.Coefficient of variation of Stock A

2.Coefficient of variation of Stock B

3.Coefficient of variation of Stock C

A)Project L requires an initial outlay at t = 0 of $60,000, its expected cash inflows are $12,000 per year for 9 years, and its WACC is 13%. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

B)Project L requires an initial outlay at t = 0 of $70,000, its expected cash inflows are $16,000 per year for 9 years, and its WACC is 13%. What is the project's discounted payback? Do not round intermediate calculations. Round your answer to two decimal places.

C)What if Project L requires an initial outlay at t = 0 of $72,000, its expected cash inflows are $14,000 per year for 12 years, and its WACC is 11%. What is the project's payback? Round your answer to two decimal places.

Company Z-prime’s earnings and dividends per share are expected to grow by 3% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year’s dividend is $9, the market capitalization rate is 11% and next year’s EPS is $16. What is Z-prime’s stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

You would like to purchase a new car in 4 years after you graduate college. The car you want to buy currently costs $35,000, but you expect the price of this model of car to increase by 5% per year for the next 4 years. How much do you have to invest today if you savings account earns 3% APR (nominal) to exactly pay for your new car?

$421,657

$38,122

$42,543

$37,799

please work out and show how nominal rate works into the problem

1.) What is the free cash flow of a firm with revenues of $357 million, operating profit margin of 34%, tax rate of 32%, depreciation and amortization expense of $22 million, capital expenditures of $38 million, acquisition expenses of $6 million and change in net working capital of $18 million? Answer in millions, rounded to one decimal place (e.g., $245.63 = 245.6).

2.) You are valuing Soda City Inc. It has $139 million of debt, $74 million of cash, and 189 million shares outstanding. You estimate its cost of capital is 9.1%. You forecast that it will generate revenues of $731 million and $769 million over the next two years. Projected operating profit margin is 36%, tax rate is 22%, reinvestment rate is 51%, and terminal exit value multiple at the end of year 2 is 10. What is your estimate of its share price? Round to one decimal place. ​[Hint: Compute projected FCFF for years 1 and 2 based on info provided, compute terminal value using the exit multiple method, discount it all to find EV, walk the bridge to Equity, divide by number of shares outstanding.]

Halliford Corporation expects to have earnings this coming year of

$ 3.385$3.385

per share. Halliford plans to retain all of its earnings for the next two years.​ Then, for the subsequent two​ years, the firm will retain

45 %45%

of its earnings. It will retain

19 %19%

of its earnings from that point onward. Each​ year, retained earnings will be invested in new projects with an expected return of

19.4 %19.4%

per year. Any earnings that are not retained will be paid out as dividends. Assume​ Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If​ Halliford's equity cost of capital is

10.5 %10.5%​,

what price would you estimate for Halliford​ stock?

Consider the following capital investment proposal:
It requires an initial investment of $1,170 million. The project is expected to generate the following net cash flows:
$417 million in year 1
$328 million in year 2
$475 million in year 3
$531 million in year 4.

If the company uses a discount rate of 11%, how much is the profitability index?

Enter your answer in millions. Round to one decimal.

Please show work

You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $ 2 million in its first year and that this amount will grow at a rate of 3 % per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10 % per​ year?

The present value of the new drug is ​?million.  ​(Round to three decimal​ places.)

Net cash flows-No terminal value Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased 3 years ago at a cost of $47,100, and this amount was being depreciated under MACRS using a​ 5-year recovery period. The machine has 5 years of usable life remaining. The new machine that is being considered costs $76,700 and requires $4,000 in installation costs. The new machine would be depreciated under MACRS using a​ 5-year recovery period. The firm can currently sell the old machine for $54,300 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and expenses​ (excluding depreciation and​ interest) associated with the new and the old machines for the next 5 years are given in the table

    New machine           Old machine  
Year   Revenue   Expenses
(excluding depreciation and interest)       Revenue   Expenses
(excluding depreciation and interest)
1   $749,200    $719,600       $673,700   $659,100
2   749,200   719,600       675,700   659,100
3   749,200   719,600       679,700   659,100
4   749,200   719,600       677,700   659,100
5   749,200   719,600       673,700   659,100

(Table

Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes              
   Percentage by recovery year*          
Recovery year    3 years    5 years    7 years    10 years
1                         33%         20%         14%          10%
2                       45%           32%        25%           18%
3                        15%           19% 18%      14%
4                          7%            12%       12%       12%
5                                           12%         9%        9%
6                                            5%         9%         8%
7                                                          9%       7%
8                                                        4%        6%
9                                                                   6%
10                                                                  6%
11                                                                 4%
Totals   100%   100%   100%   100%
               

contains the applicable MACRS depreciation​ percentages.) Note: The new machine will have no terminal value at the end of 5 years.)

a. Calculate the initial investment associated with replacement of the old machine by the new one.

b. Determine the incremental operating cash inflows associated with the proposed replacement.​ (Note: Be sure to consider the depreciation in year​ 6.)

c. Depict on a time line the relevant cash flows found in parts (a​) and (b​) associated with the proposed replacement decision.

Consider a project to supply 100 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,705,000 five years ago; if the land were sold today, it would net you $1,780,000 aftertax. The land can be sold for $1,748,000 after taxes in five years. You will need to install $5.35 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project’s five-year life. The equipment can be sold for $625,000 at the end of the project. You will also need $575,000 in initial net working capital for the project, and an additional investment of $50,000 in every year thereafter. Your production costs are .48 cents per stamp, and you have fixed costs of $1,050,000 per year. If your tax rate is 21 percent and your required return on this project is 10 percent, what bid price should you submit on the contract? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)

What is the bid price?

What is the Pretax cost savings?

How to apply these formulas for Mean and Variance in Finance?

With examples and what the letters mean, thank you

Mean

E(?? ) = 1 ? ∑??,? ? ?=1

Variance

VAR(?? ) = 1 ? − 1 ∑[??,? − ?(?? )] 2 ? ?=1 ,

What are the three different forms of business organization? Explain with examples.

An old two-flat can be purchased for $200,000 cash. The two units can bring in a total of $2,500 per month (allowing for normal vacancies). The total operating expenses for property taxes, repairs, gardening, and so forth are estimated to be $200 per month. For tax purposes, straight-line depreciation over a 20-year remaining life with to a zero salvage value will be used.

Of the total $200,000 cost of the property, $50,000 is the value of the land. Assume a 38% marginal income tax bracket (combined state and federal taxes) applies throughout the 20 years. This tax rate applies to ordinary income and capital gains/losses.

Since there is no growth expected in rents or expenses, depreciation is straight-line, and the tax rate doesn’t change, the ATCF’s for each year, 1 to 20, will be the same.

What after-tax IRR would you expect assuming that the property is held for twenty years and then sold for $50,000?

What after-tax IRR would you expect assuming that the property is held for twenty years and then sold for $150,000?