Ask Question, Ask an Expert


Ask Basic Finance Expert

1) 10 A firm that is subject to the 40% tax rate has debt of $60M, equity of $140M, and no preferred stock. Determine the firm's cost of capital (WACC) if its pre-tax cost of new debt is 12%, the pre-tax cost of its old debt is 8%, and its cost of equity is 14.5%?

2) You have to select between two investments. First investment needs you to pay 1,989,453 three years from now, but it will earn you cash flow every year from the second year to 6th year; starting with 129,827 on 2nd year and it will rise 5% per year for three years, plus, you'll get back the lump sum of 1,639,837 on sixth year. 2nd investment needs you to pay only 1,873,963 today, and then you will earn 423, 296 beginning 1 year from now and this will continue until the 5th year. Government bond rate stands at 2.3%. You can afford either investment, but can only select one. With NPV concept, which is a better investment for you, and how much is it better?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914392

Have any Question? 

Related Questions in Basic Finance

What are nondeposit liabilities give some exampleswhat are

What are nondeposit liabilities? Give some examples. What are negotiable CDs? How do nondeposit liabilities differ from negotiable CDs? What are retail sweep accounts? What are credit derivatives?

Managerial report with 5 steps in exceltyler is 37 years

Managerial Report with 5 steps in Excel Tyler is 37 years old and would like to establish a retirement plan. Develop a spreadsheet model that could be used to assist Tyler with retirement planning. Your model should incl ...

What is a financial crisiswhy does an economic downturn

What is a financial crisis? Why does an economic downturn often lead to a financial crisis? Explain why the reverse is also true.

A small country has a straight-line upward-sloping domestic

A small country has a straight-line, upward-sloping domestic supply curve and a straight-line, downward-sloping domestic demand curve for one of its key export products. The world price for this product is $150 per ton. ...

A 525 percent coupon bond with 18 years left to maturity

A 5.25 percent coupon bond with 18 years left to maturity can be called in six years. The call premium is one year of coupon payments. It is offered for sale at $1,090.90. What is the yield to call of the bond? (Assume i ...

Repurchase agreements based on what you know about

Repurchase Agreements Based on what you know about repurchase agreements, would you expect them to have a lower or higher annualized yield than commercial paper? Why?

Comment on the european central banks ecb activities in the

Comment on the European Central Banks (ECB) activities in the debt markets under the expanded asset purchase programme. Are they active in securitisation markets?

The fed versus congress should the fed or congress decide

The Fed versus Congress: Should the Fed or Congress decide the fate of large financial institutions that are near bankruptcy?

Comment on this statement people care about real interest

Comment on this statement: "People care about real interest rates, not nominal rates. Therefore, money demand should depend on the difference between the real rates on money and bonds, not the nominal rate on bonds."

Reddy et al 2013 suggest that the australian commercial

Reddy et al (2013) suggest that the Australian commercial property sector has an average historical return of 9.5% with a historical standard deviation of 8.24% and historical correlation with the market of 0.58. The mar ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate