Select all options that describe the Weighted Average Cost of Capital (WACC) for a company:

The following data applies to Micro Advanced Developers (MAD).

As a financial manager you have been given the task of calculating the company's weighted average cost of capital (WACC). Ignore the effect of taxes.

a)Firstly, you realise that the cost of debt is needed. Calculate the cost of debt for MAD. You may give your answer as a percentage per annum to the nearest percent or use linear interpolation or a financial calculator to give a more accurate result.

Cost of debt =  % pa

b)Secondly, the cost of equity must also be identified. Calculate the cost of equity for MAD. Give your answer as a percentage per annum to 1 decimal place.

Cost of equity =  % pa

c)Finally, calculate the weighted average cost of capital for MAD. Give your answer as a percentage per annum to 1 decimal place.

Weighted average cost of capital =  % pa

You have the following information on a project's cash flows. The cost of capital is 8.0%

The NPV of the project is $____. Round to two decimal places.

The new equipment will cost $7,500. And it would be depreciated on a straight-line basis over the project's 5-year life (depreciation rate is 20% per year) and would require additional $200 net operating working capital that would be recovered at the end of the project's life. There is no salvage value.

After purchasing this equipment, firm could sell 1000 products per year at $6 per one. And operating costs is 50% of sale revenue. Tax rate is 40% and Weighted average cost of capital is 15%.

Questions: (Please list the necessary steps not only a final number)

Please show the process of CF estimation and based on the CF information you get to answer following questions.

What is the project's NPV? Should the firm purchase this equipment based on NPV?

What is the project's IRR? Should the firm purchase this equipment based on IRR?

What is the project's MIRR? What is the project's Payback?

Excel will do

Q. Assume a basket that costs $100 in the U.S. would cost $120 in the United Kingdom. (18 pts)

a) What is the U.S. real exchange rate, qUS/UK, with the United Kingdom? Intuitively, what does this real exchange rate imply? (5 pts)

b) Does PPP hold true here? Why? (5 pts)

c) Instead, let’s assume that a basket that costs $100 in the U.S. would cost also $100 in the United Kingdom. For the next year, the Fed is predicted to keep U.S. inflation at 2% and the Bank of England is predicted to keep U.K. inflation at 3%. Does PPP hold true here? If so, use relative PPP to predict what will happen to the dollar’s value against the poundin one year’s time. (8 pts)

1. Your company is analyzing the possible purchase of new equipment at a cost of $150,000. Assume straight-line depreciation and a 3-year depreciable life. It is estimated the equipment would save:$120,000 in Year 1$120,000 in Year 2$120,000 in Year 3$120,000 in Year 4Project operating costs are expected to be $40,000 each year. The firm’s income tax rate is 21 percent, and its required rate of return or cost of capital is 12 percent. Calculate the Net Present Value (NPV) of this project. Should your firm accept or reject the project? Year 4

Students and faculty alike are concerned about the cost of textbooks. A committee of both students and faculty searched the internet for appropriate books that would be available for less than $60. A random sample of 40 texts gave a mean of $65.12 with a standard deviation of $23.08. At the 5% level of significance, do the texts selected in the sample cost significantly more than the amount the committee considered appropriate?

(1) List all the information necessary for conducting the hypothesis test and state which

test you are doing.

(2) State the null and alternative hypotheses and whether you would use a right-tailed

test, a left-tailed test, or a two-tailed test.

(3) Sketch the critical reason, indicating on the sketch what the critical value(s) are.

(4) Determine the calculated z or t.

(6) Decide if you will Reject or Fail to Reject the Null Hypothesis.

(7) Interpret your conclusion in terms of the problem.

(8) If there are any questions to be answered in the problem, do so.

Daily Enterprises is purchasing a $10.45 million machine. It will cost $74,306.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.35 million per year along with incremental costs of $1.39 million per year. Daily’s marginal tax rate is 36.00%. The cost of capital for the firm is 14.00%. (answer in dollars..so convert millions to dollars) What is the year 0 cash flow for the project? What is the yearly cash flow from the project? The project will run for 5 years. What is the NPV of the project at the current cost of capital?

Explain what the main components of the cost of capital are. How do you calculate these components?