week 4 finance lab 10 questions?

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1. A. Templeton Extended care facilities, inc. is considering the acquisition of a chain of cemeteries for $400 million... since the primary asset of this business is del estate, templeton's management has determined that they will be able to borrow the majority of the money needed to buy the business. the current owner have no debt financing but templeton plans to borrow $300 million and invest only $100 million in equity in the acquisition. what weights should templeton use in computing the WACC for this acquisition?
#1) The appropriate weight of debt, W d, is? ______

 

2. Question 2
Compute the cost of capital for the firm for the following
A) a bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.7 percent. Interest Payment are $58.50 and are paid semiannually. The bonds have a current market value of $1,127 and will mature in 10 years. the firms marginal tax rate is 34 percent.
Answer A)=The after-tax cost of debt is ____%
please note answer A) has to be entered in order to get the question B. and so on for C) and D) please send me answer A) thanks then ill send you the next question B

 

B. B) A new common stock issue that paid a $1.75 dividend last year. The firms dividends are expected to continue to grow at 6.2 percent per year, forever. the price of the firms common stock is now $27.25
The cost of common equity____%

 

C. C) A preferred stock that sells for $126, pays a dividend of 8.3 percent, and has a $100 par value. Answer:______
the of prefer stock is_____%

 

D. D) A bond selling to yield 11.2 percent where the firms tax rate is 34 percent.
The after tax cost of debt is ___%

 

3. question 3)
The prefer stock of gator industries sells for $34.88 and pays $2.73 per year in dividends. what is the cost of preferred stock financing? if gator were to issue 453,000 more preferred shares just like the ones it currently has outstanding, it could sell them for $34.88 a share but would incur flotation of $2.93 per share. what are the flotation cost for issuing the preferred shares and how should this cost be incorporated into the NVP of the project being financed?
The firms cost of preferred stock financing is ______%

 

4. Question 4)
the walgreen corporation is contemplating a new investment that it plans to finance using one third debt. the firm can sell new $1,000 par value bonds with a 15 year maturity at a price of $955 that carry a coupon interest rate of 12.5 percent that is paid semiannually. if the company is in a 34 percent tax bracket, what is the after tax cost of capital to walgreens for the bonds?
the aftertax cost of debt is ___%

 

5. question 5)
As a consultant to GBH skiwear, you have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. you have determined the market value of the firms current capital structure (which the firm considers to be its target mix of financing sources) as follows:
to finance the purchase, GHB will sell 20 year bonds with a $1,000 par value paying 8.5 percent per year (paid semiannually) at the market price of $942 Preferred stock paying a $2.46 dividend can be sold for $35.44 common stock for GHB is currently selling for $50.86 per share. The firm paid $3.97 dividend last year and expects dividends to continue growing at the rate of 4.3 percent per year into the indefinite future. the firms maginal tax rate is 34 percent. what discount rate should you use to evaluate the ware house project?
a) calculate component weights of capital.
The weights of debt in the firms capital structure is ___% round to two decimal places.

 

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