WACC and Optimal Capital Structure

F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows:

F. Pierce uses the CAPM to estimate its cost of common equity, r_s and at the time of the analaysis the risk-free rate is 7%, the market risk premium is 8%, and the company's tax rate is 40%. F. Pierce estimates that its beta now (which is "unlevered" because it currently has no debt) is 0.9. Based on this information, what is the firm's optimal capital structure, and what would be the weighted average cost of capital at the optimal capital structure? Do not round intermediate calculations. Round your answers to two decimal places.

WACC and Optimal Capital Structure

F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows:

F. Pierce uses the CAPM to estimate its cost of common equity, r_s and at the time of the analaysis the risk-free rate is 7%, the market risk premium is 6%, and the company's tax rate is 30%. F. Pierce estimates that its beta now (which is "unlevered" because it currently has no debt) is 1.4. Based on this information, what is the firm's optimal capital structure, and what would be the weighted average cost of capital at the optimal capital structure? Do not round intermediate calculations. Round your answers to two decimal places.

Perform rank correlation analysis on the following data set:

What is the rank correlation coefficient?  (Round to three decimal places.)

What is the critical rho value at a 0.05 significance?

Do we have correlation?

• Yes, the rank correlation coefficient is larger (in absolute value) than the critical rho value.
• Yes, the rank correlation coefficient is smaller (in absolute value) than the critical rho value.
• No, the rank correlation coefficient is larger (in absolute value) than the critical rho value.
• No, the rank correlation coefficient is smaller (in absolute value) than the critical rho value.

A car owner conducts an experiment by filling up their car with 10 gallons of gas and drives until it runs out of gas. The number of miles driven from the 10 times of doing this experiment is shown below:

275 240 303 243 259 187 311 276 251 263

Find the following: Show ALL necessary work

a) Median

b) Lower and Upper Quartiles

c) IQR

d) State the mild outliers, if any. If there are no outliers, then state "no outliers".

Danube recently acquired a delivery van for $22,300 paying cash. Danube projects a 4 year useful service life and a remaining residual value on the delivery van of $2,200. Danube expects to drive the van 108,000 miles during the useful service life. Please compute the annual depreciation for the 4 year life of the delivery van for the double-declining method

1. Set up the following statements as a null and an alternative hypotheses.

a) A cereal manufacturer is testing its cereal filling process. Its goal to have each cereal box contain 368 grams.

b) A company claims that the life of its Milemaster tire exceeds 47,000 miles.

c) We want to test if college students take less than five years to graduate from college.

d) We want to test whether the mean height of 8th graders is 66 inches.

5. A volcano is located at the point (1, 3). Scientists have determined that a possible eruption of this volcano would affect the area within the radius of 4 miles around the volcano.

(a) Two locations are being considered for a new housing estate: the point (−1, −2) and the point (−1, 6). Determine which of those locations is at a safe distance from the volcano. Justify your answer.

(b) Determine the closest point in the direction ~v = [1, 1] from the volcano, that is safe from a possible eruption.

Two fuel additives are being tested to determine their effect on gasoline mileage. Seven cars were tested with additive 1 and nine cars were tested with additive 2. Data: Additive 1 - 17.3,18.4, 19.1, 17.7, 17.2, 17.6, 18.5; Additive 2 - 18.7, 18.8, 20.3, 20.0, 21.1, 18.7, 18.8, 20.7, 21.2. The following data show the miles per gallon obtained with the two additives. I am struggling to determine the p-value.

Hailee makes the following contributions in 2019 (all of which she can substantiate): Goodwill, clothing she bought for $950 with a FMV of $310. Salvation Army, automobile, FMV of $750, sold for $700. YWCA, 200 volunteer miles. Nonprofit cemetery, $500 for care of her grandfather's crypt. Qualified exchange student, $1,000 during four months for the well-being of the student. How much will she be able to deduct for contributions on Schedule A? $1,238 $1,288 $1,738 $2,838