. You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent. Debt: 8,000 6.2 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 110 percent of par; the bonds make semiannual payments. Common stock: 300,000 shares outstanding, selling for $50 per share; the beta is 1.08. Preferred stock: 12,000 shares of 7 percent preferred stock outstanding, currently selling for $70 per share. Market: 8 percent market risk premium and 4.2 percent risk-free rate. What is the company's WACC? Please do this step by step. Thank you!

A biologist believes that men in Greybull, Wyoming are taller than men in other places. It is known that the average height of men in the U.S. is 69 inches with a standard deviation of 2.5 inches. The biologist randomly selects 40 men in Greybull, Wyoming and gets an average height of 70 inches. The biologist wants to use a 95% significance level to test this claim.

two sample, dependent means

two sample, independent means

one sample proportion

cannot do

one sample mean

QUESTION 8

1. VFIC Industries has come up with a new mountain bike prototype and is ready to go ahead with pilot production and test marketing. The pilot production and test marketing phase will cost $100,000 and last for one year. The management team believes that there is a 30% chance that the test marketing will be successful and that there will be sufficient demand for the new mountain bike. If the test-marketing phase is successful, then VFIC will invest $2 million to build a plant immediately that will generate expected annual after-tax cash flows of $300,000 in perpetuity starting in year two. If the test marketing is not successful, VFIC can still go ahead and build the new plant, but the expected annual after-tax cash flows would be only $150,000 in perpetuity starting in year two. VFIC's cost of capital is 10%.
   
   Suppose that VFIC has the option to sell the prototype mountain bike at the end of the first year for $50,000. The NPV of the VFIC Mountain Bike Project is around:

A person’s muscle mass is expected to be associated with age. Some people also thought exercise time would be associated with the muscle mass. To explore the potential relationships between muscle mass and age, muscle mass and exercise time, a nutritionist randomly selected 20 women from a population of women with age ranging from 40 to 80 years old, and measured their muscle mass (a score without unit) and exercise time (hours per month)

Using the regression equation representing the SIGNIFICANT relationship, make the following predictions: [of note: based on the regression model you chose, information for one of Age and ExcercieTime is not needed for prediction, but you should make your own decision on which variable is not needed!]

The expected Muscle Mass (the mean) for Women at Age= 65 and ExerciseTime = 20; (4 points)

The expected difference in Muscle Mass between women with Age = 55 and ExcerciseTme =23 and women with Age = 58 and ExcerciseTime=25. (4 points)

A person’s muscle mass is expected to be associated with age. Some people also thought exercise time would be associated with the muscle mass. To explore the potential relationships between muscle mass and age, muscle mass and exercise time, a nutritionist randomly selected 20 women from a population of women with age ranging from 40 to 80 years old, and measured their muscle mass (a score without unit) and exercise time (hours per month)

Using the regression equation representing the SIGNIFICANT relationship, make the following predictions: [of note: based on the regression model you chose, information for one of Age and ExcercieTime is not needed for prediction, but you should make your own decision on which variable is not needed!] The expected Muscle Mass (the mean) for Women at Age= 65 and ExerciseTime = 20; The expected difference in Muscle Mass between women with Age = 55 and ExcerciseTme =23 and women with Age = 58 and ExcerciseTime=25.

Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of r_d = 10% as long as it finances at its target capital structure, which calls for 40% debt and 60% common equity. Its last dividend (D₀) was $2.50, its expected constant growth rate is 5%, and its common stock sells for $21. EEC's tax rate is 25%. Two projects are available: Project A has a rate of return of 15%, and Project B's return is 9%. These two projects are equally risky and about as risky as the firm's existing assets.

1. What is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.

     %

2. What is the WACC? Do not round intermediate calculations. Round your answer to two decimal places.

     %

3. Which projects should Empire accept?

   Project A

WACC

Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of r_d = 11% as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. Its last dividend (D₀) was $2.65, its expected constant growth rate is 6%, and its common stock sells for $30. EEC's tax rate is 40%. Two projects are available: Project A has a rate of return of 15%, and Project B's return is 11%. These two projects are equally risky and about as risky as the firm's existing assets.

1. What is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations.
   %
2. 
   
3. What is the WACC? Round your answer to two decimal places. Do not round your intermediate calculations.
   %
4. 
   
5. Which projects should Empire accept?
   -Select-Project AProject B

1. We have two mutually exclusive investments with the following cash flows: (13 marks total)

1. Using a financial calculator, calculate the IRR for each of the investments. (1 mark)

b. Based on the IRR rule and a required return of 15%, which investment should we choose?   

c. Calculate the NPV profile for each investment, using the discount rates of 0%, 5%, 10%, 15%, 20%, and 25%. Perform this task in an Excel spreadsheet. Cautionary note: If you use the =NPV() function in Excel to calculate the NPVs, it will provide incorrect answers. The NPV() function actually calculates the present value of all cash inflows. The NPV should be calculated as =NPV(all cash inflows) – initial cash outflow.                                                            

d. Plot the NPV profile for both projects using the X-Y scatter function in Excel.                                                                                                      

e. If the required return on this project is 16%, would both NPV and IRR give us the same conclusion? Explain your answer.                                               (2.5 marks)

f.   If the required return on this project is 9%, would both NPV and IRR give us the same conclusion? Explain your answer.                                               (2.5 marks)

h. Calculate the crossover rate at which we are indifferent between the two investments.                                                                     

Preferred dividends   Acura Labs Inc. has an outstanding issue of preferred stock with a par value of ​$6060 and an 2020​% annual dividend. a.  What is the annual dollar​ dividend? If it is paid​ quarterly, how much will be paid each​ quarter?   b.  If the preferred stock is noncumulative and the board of directors has passed the preferred dividend for the last 44 ​quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common​ stockholders? c.  If the preferred stock is cumulative and the board of directors has passed the preferred dividend for the last 44 ​quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common​ stockholders?

Two teams, A and B, are playing a series of games. Assume

1. probability that A won a game is p

2. result of a game will not aect result of the next game

Find the range of p such that team A has the advantage in a best four of seven series.