A) Find the Payback period for the following project: Project X Initial Outlay $8,960 Year I $3,030

A)

Find the Payback period for the following project:

Project X Initial Outlay $8,960

 Year I $3,030

Year 2 $3,800

Year 3 13,740

Year 4 $6,010

The answer should be calculated to two decimal places.

B) 

Find  the net present value  for the following series of future cash flows, assuming the company’s cost of capital is 8.86 percent the initial outlay is $471,338

Year 1 : 176980

Year 2 : 152,444

Year 3 : 197,804

Year 4 :136,682

Year 5 : 168,913

C)
 a project has initial outlay of $2593. It has a single cashflow at the end of year 10 of $5431. What is the IRR of the project?

D)

Find the profitability index for the following series of future cashflows assuming the company’s cost of capital is 8.33 percent the initial outlay is $467,184

Year 1: $160,540

Year 2: $132,403

Year 3 : $126,369

Year 4 : $ 175825

Year 5 : $196,059

E)

Black hill inc. sells $100 million worth of 24 year to maturity 13.75% annual coupon bonds. The net proceeds (after floatation cost ) are $ 974 for each $1000 bond. What is the before tax cost of capital for this debt financing?

F)

Calculate the cost of new common equity financing of stock Q using Gordon model

 

Last year dividend

Growth rate of dividend

Selling price of stock

Floatation cost

Cost of common stock

Stock Q

$4.17

4%

$40.12

$4.43

?

 

G)

Given the following information on Big Brothers inc. capital structure, compute the company’s weighted average cost of capital (WACC) the company’s marginal tax rate is 40%

Type of capital

Percent of capital structure

Before tax component cost

Bond

56%

 

8.19%

Preferred stock

13%

13.77%

Common stock

Please calculate it

12.21%

 

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