problem1. Castro Chemical Company sold a no callable bond various years ago that now has 15 years to maturity. This bond has 8.75% annual coupon, paid semi-annually, sells at a price of $1,045 and has par value of $1,000. If the firm’s tax rate is 34%, what is after-tax cost of debt for use in WACC calculation?
problem2. Bosio Inc's perpetual preferred stock sells for $87.50 per share and it pays on $6.50 annual dividend. When the company were to sell a new preferred issue, it would acquire a flotation cost of 5.00% of the price paid by investors. What is the companies cost of preferred stock for use in computing the WACC
problem3. What is the cost of preferred stock of company when 5.25 percent preferred stock of is currently selling for $60.50 per share and par value is $100.
problem4. A project generates annual net income of $46,200, $51,800, and $62,900 over its three year life, correspondingly. The initial cost of the project is $675,000. This cost is depreciated straight-line to zero book value over 3 years. What is average accounting rate of return when the required discount rate is 14.5%? You are analyzing a project and have collected the following data: Year Cash Flow 0 - 175,000 1 56,400 2 61,800 3 72,000 4 75,000 required payback period 2.5 years Required AAR 11.5% Required return 14.5%
problem5. Which one of the following techniques of project analysis is defined as evaluating the value of a project based on the present value of the project's expected cash flows?
A. Constant dividend growth model
B. Discounted cash flow valuation
C. Average accounting return
D. Expected earnings model
E. Internal rate of return