A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.

The company currently has outstanding a bond with a 11.2 percent coupon rate and another bond with an 8.8 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 12.1 percent. The common stock has a price of $66 and an expected dividend (D₁) of $1.86 per share. The historical growth pattern (g) for dividends is as follows:

The preferred stock is selling at $86 per share and pays a dividend of $8.20 per share. The corporate tax rate is 30 percent. The flotation cost is 2.5 percent of the selling price for preferred stock. The optimal capital structure for the firm is 20 percent debt, 10 percent preferred stock, and 70 percent common equity in the form of retained earnings.

a. Compute the historical growth rate. (Do not round intermediate calculations. Round your answer to the nearest whole percent and use this value as g. Input your answer as a whole percent.)

b. Compute the cost of capital for the individual components in the capital structure. (Use the rounded whole percent computed in part a for g. Do not round any other intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
  

c. Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
  

You are considering a hotel purchase. The current purchase price is $ 3,000,000. The bank is willing to finance 70% of the purchase price for 20 years in quarterly installments at 8% per annum mortgage nominal rate. What is the balloon payment you will have to pay, if you want to resell the hotel after 10 years? Consider a fully amortizing fixed rate mortgage.

a)      $ 0

b)      $ 1,445,395

c)       $ 1,669,270

d)      $ 1,981,333

Rib​ & Wings-R-Us is considering the purchase of a new smoker oven for cooking​ barbecue, ribs, and wings. It is looking at two different ovens. The first is a relatively standard smoker and would cost $ 50,000, last for 7 years, and produce annual cash flows of $ 15,000 per year. The alternative is the​ deluxe, award-winning​ Smoke-alator, which costs $ 80,000 and, because of its patented humidity​ control, produces the​ "moistest, tastiest barbecue in the​ world." The​ Smoke-alator would last for 13 years and produce cash flows of $ 22,000 per year. Assuming a required rate of return of 10 percent on both​ projects, compute their equivalent annual annuities (EAAs​).

The EAA of the standard smoker is $. (Round to the nearest​ dollar.) ANSWER:

The EAA of the​ Smoke-alator is $. (Round to the nearest​ dollar.) ANSWER:

Rib​ & Wings-R-Us should purchase the Smoke-alator or standard smoker. ANSWER:

1. Identify an investment that you could reduce Exchange Rate risks through spreading. Carefully explain why this would spread your risk.

Explain, as a portfolio finance manager, how you would manage a portfolio for an investor?   What analysis would you perform, how would you know when to advise a change should be made in the composition of the portfolio, and if you had to objectively explain the reason for the change, what would you say?  

9. Suppose Blue Thumb Tools is considering the introduction of a new, heavier hammer to be used for driving spikes. The new hammer will cost $490,000. The cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the new hammer can be scrapped for $40,000. The new hammer will save the firm $146,000 per year in pretax operating costs, and it required an initial investment in net working capital of $35,000. The tax rate of the firm is 30%.

What are the cash flows of firm’s new project (using a time line)?

What is the net present value of this project (list your setups)?

What is the IRR of this project (list your setups)?

Please solve without excel so that I can see the steps.

Use the following returns for X and Y. Returns Year X Y 1 22.0 % 27.0 % 2 – 17.0 – 4.0 3 10.0 29.0 4 20.0 – 15.0 5 5.0 33.0 Requirement 1: Calculate the average returns for X and Y. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Average returns X % Y % Requirement 2: Calculate the variances for X and Y. (Do not round intermediate calculations. Round your answers to 6 decimal places (e.g., 32.161616).) Variances X Y Requirement 3: Calculate the standard deviations for X and Y. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Standard deviations X % Y %

You are considering a new product launch. The project will cost $1,850,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 180 units per year; price per unit will be $22,000, variable cost per unit will be $14,000, and fixed costs will be $520,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 36 percent.

a. The unit sales, variable cost, and fixed cost projections given above are probably accurate to within ±10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios?

b. Calculate the sensitivity of your base-case NPV to changes in fixed costs.

c. What is the accounting break-even level of output for this project?

Tyler Inc.'s most recent annual dividend was $3.65 a share. The firm has been growing at a consistent 4% rate for several years, but analysts generally believe better times are ahead and future growth will be in the neighborhood of 5%. The stock is currently selling for $79. Stocks similar to Tyler earn returns ranging from 8% to 10%.

Assuming that instead of rising, Tyler's growth rate remains at 4% or declines to 3%. Round your answers to two decimal places.

A) Calculate value for a share of Tyler at a Growth rate of 3%, interest rate of 9%

B) Calculate value for a share of Tyler at a Growth rate of 3%, interest rate of 10%

Matt and Debra Baxter live in an upscale neighborhood in Orem, Utah. Matt is a partner in the family owned business. Debra stays home with their child, Brady, who is age 5.

After visiting with their financial planner, the couple became concerned that they were spending too much and not putting enough funds aside for Brady’s future educational needs. Matt earns $85,000 per year, but with the rising costs of education, they are concerned.

Matt is an alumni of Duke University, a prestigious school with tuition and book expenses of approximately $18,000 per year. Debra graduated from Utah Valley University. The expense for tuition and books there is estimated at about $8,000 per year. When Brady turns 18, the couple wishes to send him to one of these two exceptional universities. They have a slight preference for Utah Valley University. The problem, however, is that with the rate at which tuition is increasing the Baxter’s are not sure they can save enough money and they have decided they do not want to borrow to pay for Brady’s education. Assume the tuition at both universities will increase at an annual rate of 5% from now until Brady starts college.

Living expenses are currently estimated to be $9,000 per year at both schools. This expense is expected to increase at only 3% per year. Further, assume that Baxter’s can deposit their money into a growth oriented mutual fund which has historically earned 12% per annum.

The couple wishes to save by having a pre-determined amount automatically withdrawn from their bank account at the end of each month. They plan to contribute from now until Brady starts college. When Brady starts college, at the beginning of his freshman year, they will stop making contributions. They want to have enough in their account when Brady starts college so the principle and interest will cover all four years of his college expenses. They will make annual withdrawals from the account to cover both tuition and living expenses for Brady at the beginning of his freshman, sophomore, junior, and senior years. When the withdrawal for the senior year is made the account balance will be zero.

Complete a thorough analysis and write a professional letter to the Baxter’s (who don’t understand finance) explaining the analysis you performed, why you performed it, and the results and conclusions. In the letter and attached schedules provide information that answers the following questions.

-When Brady is 18, what will be the tuition expense, living expense, and total expense for each of the four years that Brady will attend college? Provide the information for each University.

-What amount will be needed in the account when Brady starts his freshman year if he attends Duke? What amount if he attends UVU?--

-How much money will Matt and Debra have to deposit at the end of each month to allow Brady to attend Duke? How much money will have to be deposited per month to allow Brady to attend Utah Valley University? Assume that Matt and Debra stop making deposits when Brady starts college.

-The Baxter’s are concerned that given the current market performance the mutual fund will only earn 9% per year. Redo the analysis assuming they can earn only 9% per year on their investments. How much will be needed in the account when Brady starts college and how much will have to be deposited per month for Brady to have sufficient funds to attend each school?

Please show excel workthrough!

A firm has 2,000,000 shares of stock outstanding, total debt of $3,000,000 at an annual interest rate

of 8% and annual depreciation expense of $300,000, and is considering borrowing an additional

$6,000,000 at 8% and buying back one-half of those shares. Assuming EBIT of $1.2 million, what is this

company’s cash coverage ratio (a) before and (b) after the proposed restructuring? What can you

conclude about the impact of financial leverage on a firm’s cash coverage ratio?

Your company currently has

$ 1 comma 000$1,000

​par,

5.25 %5.25%

coupon bonds with 10 years to maturity and a price of

$ 1 comma 075$1,075.

If you want to issue new​ 10-year coupon bonds at​ par, what coupon rate do you need to​ set? Assume that for both​ bonds, the next coupon payment is due in exactly six months.

You need to set a coupon rate of

nothing​%.

​(Round to two decimal​ places.)

Steady Eddie Corp. is constructing its cash budget. Its budgeted monthly sales are $6,000, and they are constant from month to month. 40% of its customers pay in the first month and take the 2% discount, while the remaining 60% pay in the month following the sale and do not receive a discount. The firm has no bad debts. Purchases for next month's sales are constant at 50% of projected sales for the next month. "Other payments," which include wages, rent, and taxes, are 25% of sales for the current month. Construct a cash budget for a typical month and calculate the average net cash flow during the month. Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.

Economic order quantity ​(EOQ). Tinnendo, Inc. believes it will sell 4 million​ zen-zens, an electronic​ game, this coming year. Note that this figure is for annual sales. The inventory manager plans to order​ zen-zens 36 times over the next year. The carrying cost is ​$0.02 per​ zen-zen per year. The order cost is ​$501 per order. What are the annual carrying​ cost, the annual ordering​ cost, and the optimal order quantity for the​ zen-zens? Verify your answer by calculating the new total inventory cost.

What is the annual carrying cost for the​ zen-zens? $________ ​(Round to the nearest​ dollar.)

What is the annual ordering cost for the​ zen-zens? $_________​(Round to the nearest​ dollar.)

What is the optimal order quantity for the​ zen-zens? ________ ​zen-zens ​(Round to the nearest whole​ unit.)

At the EOQ​, what is the new total inventory​ cost? $_______​(Round to the nearest​ dollar.)

You have opened a new motel with an attached restaurant and cocktail lounge. What are the risks that your business faces? What insurance coverages should you consider essential in your insurance program?