InstructionsNAME:To complete the homework assignments in the templates provided:1. The question is provided for each problem. You may need to refer to your textbook for additional information ina few cases.2. You will enter the required information into the shaded cells.3. The cells are coded:a) T requires a text answer. Essay questions require references; use the textbook.b) C requires a calculation, using Excel formulas or functions. You cannot perform the operation on a calculatorand then type the answer in the cell. You will enter the calculation in the cell, and only the final answer will showin the cell. I will be able to review your calculation and correct, if necessary.c) F requires a number only. In some problems, a Step 1 is added to help you solve the problem.d) Formula requires a written formula, not the numbers. For example, the rate of return = [(1 + nominal)/(1+inflation)]-1, or D (debt) + E (equity) = V (value).4. Name your assignment file as lastnamefirstinitial-FINC600-Week#, and submit by midnight ET, Day 7.?Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlightyour final answer.Problem 9-2A company is 40% financed by risk-free debt. The interest rate is 10%, the expected market risk premium is 8%,and the beta of the company?s common stock is .5.Risk Free Debt40%a.b.Interest Rate10%Market Risk Premium8%Beta0.5What is the company cost of capital?What is the after-tax WACC, assuming that the company pays tax at a 35% rate?Answers:Step 1:r(d)=r(e)=D/VE/VFCCCTIP: D + E = VStep 2:a.Cost of Capitalb.TFormula (in words)CalculationCWACCTCPrinciples of Corporate Finance, Concise, 2nd EditionTaxes35%?Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight yourfinal answer.Problem 9-16What types of firms need to estimate industry asset betas? How would such a firm make the estimate? Describe the processstep by step.Answer:What types of firms need to estimate industry asset betas?THow would such a firm make the estimate? Describe the process step by step.T?Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight yourfinal answer.Problem 10-2Explain how each of the following actions or problems can distort or disrupt the capital budgeting process.a. Overoptimism byproject sponsors.b. Inconsistent forecasts of industry and macroeconomic variables.c. Capital budgeting organized solely as a bottom-up process.Answer:a.Tb.Tc.T?Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your finalanswer.Problem 10-14Suppose that the expected variable costs of Otobai?s project are 33 billion a year and that fixed costs are zero.a. How does this change the degree ofoperating leverage (DOL)?b. Now recompute the operating leverageassuming that the entire 33 billion of costs are fixed.Answers:See page 243, Table 10.1, of textbook for additional information. Copy is also provided below.a.DOL Formula1+(Fixed cost + depreciation)/ operating profitFFixed CostsCCalculationb.1+(Fixed cost + depreciation)/ operating profitFCPrinciples of Corporate Finance, Concise, 2nd Edition
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]