1. A firm has a weight of debt of 10%, and a weight of equity of 90%. Bondholders earn a 6% return while stock holders earn a 13% return. The firm has an average tax rate of 31%.
What is the Weighted Average Cost of Capital for this firm?
2. A firm has a weight of debt of 10%, and a weight of equity of 90%. Bondholders earn a 6% return while stock holders earn a 13% return. The firm has an average tax rate of 31%.
What is the after-tax cost of debt for this firm?
3. Analysts at your firm are examining a project with uncertain cash flows. There is a 10% chance the project will yield an NPV of $9,300, a 60% chance the project will yield an NPV of $13,600, a 20% chance the project will yield an NPV of 1$5,300, and a 10% change the project will yield an NPV of $22,300.
What is the Coefficient of Variation of this project?