james PLC one of the companies listed on the stock exchange wishes to calculate its updated weighted Average cost of capital for use in the investment appraisal process.

$'

Million

Issued shared capital ($100 shares 2,000

Share premium 1,300

Reserves 145

Share Holders funds 3,445

6% irredeemable Debentures 1,400

9% Redeemable Debentures 1,450

Bank loan 500

Total Long - Term liabilities 3,350

The current cumulative interest market value per $100 units is $103 and $105 for the 6% and 9% debentures respectively. The 9% denture is redeemable at par in 10 years' time. The bank loan bears interest rate of 2% above the base rate (current base rate is 15%). The current ex-div market price of shares is $1,100 and a divided of $100 per share which is expected to grow at a rate of 5% per year has just been paid. The effective corporation tax rate for James PLC is 30%.

Required

(a) Calculate the effective after tax Weighted Average cost of Capital (WACC) for James PLC.

(b) Using the traditional theory of capital structure explain what would happen if the company took on additional debt finance.

Dingel Inc. is attempting to evaluate three alternative capital structures - A,B,C. The following table shows the three structures along with relevant cost data. The firm is subject to a 40% tax rate. The risk-free rate is 5.3% and the market return is currently 10.7%

(a) Calculate the after-tax cost of debt for each capital structure

(b) Calculate the cost of preferred stock for each capital structure

(c) Calculate the cost of common stock for each capital structure

(d) Calculcate the weighted average cost of capital (WACC) for each capital structure

(e) compare the WACCs calculated in part (d) and discuss the impact of the firm's financial leverage on its WACC and its related risk

Please include detail of work

1. A perfectly competitive industry faces a demand curve given by Q^D= 2515 – 2P. The long-run total cost curve of each firm is given by LTC = 10q -.2q²+.004q³. Derive the long-run equilibrium values of output per firm, market output, price, and the number of firms.
2. You are told that in long-run perfectly competitive equilibrium each firm produces 25 units and that the marginal cost at that level of output is $10. Solve for the long-run equilibrium values of market output, price, and the number of firms. The market demand is given by Q^D= 4000 – 10P.
3. Assume the world market for calcium is perfectly competitive and that all existing producers and potential entrants are identical. Consider the following information about the price of calcium. Between 1990 and 1995, the market price was stable at $2/pound. In the first three months of 1996, the market price doubled reaching $4/pound, where it stayed for the remainder of 1996. Throughout 1997 and 1998, the price declined, eventually reaching $2/pound by the end of 1998. Between 1998 and 2002, the price remained stable at $2/pound. Assume that technology has not changed and that input prices have remained constant over the period. Using words, explain this pricing pattern over the period.

NPV & IRR:

Find the NPV (assume 8% just to calculate NPV initially) & IRR of these projects. When would you choose one over the other (i.e. what is the crossover rate)? Draw the NPV profile using 11 intervals of interest rates ranging from (and including) 0% to 100%. Place all data, ratios, calculations, findings, etc. in the first Excel sheet with references to the information in other sheets.

The tabulated data show the concentrations of N2O5 versus time for this reaction: N2O5 (g) --> NO3 (g) + NO2 (g).

1a. Determine the order of the reaction by graphing:

Zero Order: Time vs [N2O5]

First Order: Time vs ln[N2O5]

Second Order: Time vs 1/[N2O5]

1b. Determine the rate constant

1c. Predict the concentration of N2O5 at 250 seconds.

The tabulated data show the concentrations of N2O5 versus time for this reaction: N2O5 (g) --> NO3 (g) + NO2 (g).

1a. Determine the order of the reaction by graphing:

Zero Order: Time vs [N2O5]

First Order: Time vs ln[N2O5]

Second Order: Time vs 1/[N2O5]

1b. Determine the rate constant

1c. Predict the concentration of N2O5 at 250 seconds.

Managers conclude that the combination of two firms will expand revenues through cross selling of products, efficient exploitation of brands, and geographic and product line extension.

They forecast new revenues of $100 million in the first year and $200 million in year two, growing at 2.5% per year there after. The cost of goods underline these new revenues is 45% of the revenues.

To achieve these synergies will require an investment of $400 million initially, and 5% of the added revenue each year, to find working capital growth.

Find the net present value of the synergy is using a discount rate of 15% and a marginal tax rate of 40%

A company had stock outstanding as follows during each of its first three years of operations: 2,000 shares of 9%, $100 par, cumulative preferred stock and 36,000 shares of $10 par common stock. The amounts distributed as dividends are presented below. Determine the total and per-share dividends for each class of stock for each year by completing the schedule. Round dividends per share to the nearest cent. Enter "0" if no dividends are paid.

A mass of 5 kg of saturated liquid vapor mixture of water is contained in a piston cylinder device at 100 kPa, initially 2 kg of water is in the liquid phase and the rest is in the vapor phase.Heat is now transferred to the water and the piston which is resting on a set of stops, starts moving when the pressure in side reaches 200 kPa, heat transfer continues until the total volume increases by 20%, determine a. the initial and final temperature b. the mass of liquid water when the piston first starts moving c. the work done during the process d. show the process in P-V diagram