Calculation of individual costs and WACC: Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following? weights: 40?% long-term debt, 15?%

preferred? stock, and 45?% common stock equity? (retained earnings, new common? stock, or? both). The?firm's tax rate is 40?%.

Debt: The firm can sell for $950 a 11?-year, $1,000?-par-value bond paying annual interest at a 12.00?%

coupon rate. A flotation cost of 2.5?% of the par value is required in addition to the discount of $50 per bond.

Preferred stock: 8.00?% (annual dividend) preferred stock having a par value of $100 can be sold for $80.

An additional fee of $22 per share must be paid to the underwriters.

Common stock: The? firm's common stock is currently selling for $70 per share. The dividend expected to be paid at the end of the coming year? (2016) is $3.68. Its dividend? payments, which have been approximately 50?% of earnings per share in the past 5? years, were as shown in the following? table:

It is expected that to attract? buyers, new common stock must be underpriced $44 per? share, and the firm must also pay $2.50 per share in flotation costs. Dividend payments are expected to continue at 50?% of earnings. ?

(Assume that rr? = rs?)   [Round to two decimal places]

a.??Calculate the? after-tax cost of debt.

b.??Calculate the cost of preferred stock.

c.??Calculate the cost of common stock.

d.??Calculate the WACC for Dillon Labs.

Answer the questions below using the following information on a firm:

1. What is average total cost at Q=7?

2. What is marginal cost at Q =7?

3. Is this firm operating under increasing or diminishing returns at Q=7? Why?

4. Say this firm is a perfect competitor. If the market price for its product is $ 60, at what output level will it produce at (to maximize profits)?

5. Say this firm is a profit-maximizing monopolist. If the firm is maximizing profit where marginal revenue equals $40, at what output level will this firm be producing?

Multiple choice

Consider the following ORACLE relations :
One (x, y) = {<2, 5>, <1, 6>, <1, 6>, <1, 6>, <4, 8>, <4, 8>}
Two (x, y) = {<2, 55>, <1, 1>, <4, 4>, <1, 6>, <4, 8>, <4, 8>, <9, 9>, <1, 6>}

Consider the following two SQL queries SQ1 and SQ2 :

SQ1 : SELECT * FROM One)            
          EXCEPT            
         (SELECT * FROM Two);
  
SQ2 : SELECT * FROM One)            
          EXCEPT ALL           
         (SELECT * FROM Two);

A dietary supplement capsule weighing 4.84 g was ground into a fine powder. Two portions of the solid, both weighing 0.137 g, were dissolved in dilute acid and transferred to 50 ml volumetric flasks. To one of these, 5 ml of 40 ppm Mn2+ was added, and then both flasks were diluted to the mark with distilled water. When aspirated into the flame of an atomic absorption spectrometer set at a manganese absorption wavelength, the absorbances of the unknown and unknown plus standard were 0.374 and 0.641, respectively. Calculate the percentage of Mn in the capsule.

QUESTION 5

If the flow hydrograph as listed in the Table Q5 passes through a stream reach from A to B, for which K = 8.0 hr and x = 0.3

1. Determine the peak outflow discharge at B. At t=0, the outflow discharge is 40 m³/s
2. Based on the inflow and outflow hydrograph, discuss the time lag required for the peak flood to reach the downstream area. Comment on the attenuation achieved.

Table Q5

short answers:

A. In the short run, how does a business manager make wise use of the relationship between the marginal product, the average product, and the total product to help determine the point at which maximum output efficiency is achieved?

B. Analyze each action below one at a time and explain if it is a short run action or a long run action, and explain why.

1. A firm builds a lunch room extension to its office building.

2. An ice cream parlor installs a second refrigerator.

3. A utility runs its generators 4 more hours per week.

4. A firm hires 5 more workers.

5. An airport builds a new traffic control tower in 2 months.

Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7,400 copies. The cost of one copy of the book is $13.50. The holding cost is based on an 18% annual rate, and production setup costs are $150 per setup. The equipment with which the book is produced has an annual production volume of 25,000 copies. Wilson has 250 working days per year, and the lead time for a production run is 15 days.

(a)

Minimum cost production lot size

(b)

Number of production runs per year

(c)

Cycle time

(d)

Length of a production run (in days)

  days

(e)

Maximum inventory

(f)

Total annual cost (in $)

$

(g)

Reorder point

Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, r_d = 7%, r_ps = 8.1%, and r_s = 11%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.

Suppose you manage a $4.09 million fund that consists of four stocks with the following investments:

If the market's required rate of return is 13% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

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