\n 1.\u00a0\u00a0Problem 9-02 (After-Tax Cost of Debt)\n <\/p>\n
\n After-Tax Cost of Debt\n <\/p>\n
\n LL Incorporated’s currently outstanding 11% coupon bonds have a yield to maturity of 8.5%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is LL’s after-tax cost of debt? Round your answer to two decimal places.\n <\/p>\n
\n Answer: %2. Cost of Equity: Dividend Growth\n <\/p>\n
\n Summerdahl Resort’s common stock is currently trading at $33 a share. The stock is expected to pay a dividend of $2.25 a share at the end of the year (D1\u00a0= $2.25), and the dividend is expected to grow at a constant rate of 6% a year. What is the cost of common equity? Round your answer to two decimal places.\n <\/p>\n
\n Answer: %3. Cost of Equity: CAPM\n <\/p>\n
\n Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 7%. The market risk premium is 7.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.\n <\/p>\n
\n Answer: \u00a0%4. WACC\n <\/p>\n
\n David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company’s outstanding bonds is 11%, and the company’s tax rate is 25%. Ortiz’s CFO has calculated the company’s WACC as 12.9%. What is the company’s cost of equity capital? Round your answer to the nearest whole number.\n <\/p>\n
\n Answer:\u00a0 %5. NPV\n <\/p>\n
\n A project has an initial cost of $50,000, expected net cash inflows of $8,000 per year for 11 years, and a cost of capital of 10%. What is the project’s NPV? (Hint:\u00a0Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.\n <\/p>\n
\n Answer: \u00a0$6. IRR\n <\/p>\n
\n A project has an initial cost of $55,000, expected net cash inflows of $10,000 per year for 11 years, and a cost of capital of 10%. What is the project’s IRR? Round your answer to two decimal places.\n <\/p>\n
\n Answer: \u00a0%\n <\/p>\n
\n 7. \u00a0MIRR\n <\/p>\n
\n A project has an initial cost of $45,000, expected net cash inflows of $15,000 per year for 7 years, and a cost of capital of 14%. What is the project’s MIRR? (Hint:\u00a0Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.\n <\/p>\n
\n Answer: %\n <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
1.\u00a0\u00a0Problem 9-02 (After-Tax Cost of Debt) After-Tax Cost of Debt LL Incorporated’s currently outstanding 11% coupon bonds have a yield to maturity of 8.5%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is LL’s after-tax cost of debt? […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_joinchat":[]},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts\/248626"}],"collection":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/comments?post=248626"}],"version-history":[{"count":1,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts\/248626\/revisions"}],"predecessor-version":[{"id":252547,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts\/248626\/revisions\/252547"}],"wp:attachment":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/media?parent=248626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/categories?post=248626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/tags?post=248626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}