excel 2
milkywayTime
fin_310_week_2_assignment_problems.xlsxProblem 1
| Rasmussen College - FIN 310 - Module 02 Written Assignment - Problems | ||
| Problem 1 | ||
| 1. | The Marks Corporation has bonds in the market with the below characteristics. If the company has a marginal tax rate of 35% what is its cost of debt? | |
| Bond Characteristics: | ||
| Face Value: | $1,000 | |
| Coupon Rate: | 8% | |
| Frequency of payments: | Semi-annual | |
| Years to maturity: | 12 | |
| Current price of bonds: | $925 | |
Problem 2
| Rasmussen College - FIN 310 - Module 02 Written Assignment - Problems | |
| Problem 2 | |
| 2. | The Bella Corporation has a beta of 1.4, the market risk premium is 8.2% and the risk-free rate is 2.5%. What is Bella Corporation's cost of equity? |
Problem 3
| Rasmussen College - FIN 310 - Module 02 Written Assignment - Problems | |
| Problem 3 | |
| 3. | The common stock of the Sleepy Time Company is currently selling for $42 per share. The company expects to pay dividends of $2.00 per share in one year and projects a constant growth rate of 4%. What is the cost of equity for the Sleepy Time Company? |
Problem 4
| Rasmussen College - FIN 310 - Module 02 Written Assignment - Problems | |
| 4. | The Up-and-Down company has a cost of equity of 12.2%, a cost of debt of 8.6%, and a marginal tax rate of 40%. The current market value of its debt is $10 million and the current market value of its equity is $25 million. a) What is Up-and-Down's weighted average cost of capital? b) What would be the company's WACC if the amount of debt used was $20 million and equity was $15 million? |
Problem 5
| Rasmussen College - FIN 310 - Module 02 Written Assignment - Problems | ||
| Problem 5 | ||
| 5. | The Clean-You-Out Car Wash Company company has projected next year's activity as indicated below. Calculate the company's Operating Cash Flow. (The company's marginal tax rate is 35%.) | |
| Next Year's Projection: | ||
| Year 1 | ||
| Sales | $ 250,000 | |
| Cost of Goods Sold | $ 100,000 | |
| Administrative Expense | $ 20,000 | |
| Depreciation | $ 40,000 | |
| Interest Expense | $ 25,000 |
